WORLD TRADE
ORGANIZATIONS/C/W/110/Add.4
17 June 1999
(99-2470)
Council for Trade in Services
Special Session on Telecommunications ServicesOriginal:  English/
French/Spanish
COMMUNICATION FROM THE ITU
General Trends in Telecommunication Reform
(Extracts of Chapter 1)
Addendum
I. WORLD OVERVIEW
1.1 Global telecommunication reform
The dramatic pace of change in the telecommunication sector over recent years has been both
exciting and extraordinary. Incumbent telecommunication operators have undergone ownership
transformation in many countries, while many formerly insulated domestic markets have been opened
to the entry of new operators. To implement and sustain these developments, many governments have
carried through two related tasks: the reform of existing telecommunication legislation and the
creation of new regulatory agencies.
Regulatory reform around the world has been driven by the need to create a framework to
sustain changes in ownership and market structure.  Expanded private participation and/or increased
competition, it is perceived, will boost the performance of operators in the sector, subsequently
improving the deployment of infrastructure and the delivery of services. It is now increasingly
accepted that improvements in telecommunication infrastructure and related services, in turn, enhance
economic development.
Although there seems to be a close correlati on between restructuring and the improvement of
sector performance, there is no single “reform recipe” that will guarantee a successful outcome. In
fact, countries have followed quite different paths with varying degrees of success. In reforming
ownership, for example, some Asian countries - particularly China, but also others such as Vietnam -have achieved an impressive sector growth without introducing any significant transformation of the
incumbent carrier.
These experiences imply that introducing private ownership is not necessarily a prerequisite
for improved telecommunication services. Nevertheless, it cannot be denied that privatization of state-owned carriers has, in many cases, brought consid erable improvement. The issue, therefore, is to
understand in which situations, and accompanied by which criteria, privatization is most likely to be
an effective strategy for reform.
The forces that have driven the numerous countries to sell part or all of their national
operators are also quite distinct. Some of the early privatizations, such as the United Kingdom and
Chile, were based on the predominant political philosophy of the government in power at the time.
1
By contrast, the privatizations in several developing countries in the late 1980s were provoked bydeep and growing fiscal crises (e.g., Argentina, Mexico and, to some extent, Malaysia). More recent
privatization programmes have been driven by a variety of different factors, such as:S/C/W/110/Add.4
Page 2
• the need to raise capital to expand infrastructure (e.g., Singapore)
• the desire to have technology transferred, along with management expertise (several
African states)
• the intention of the state to withdraw from the provision of services by opening the
market to competition (e.g., Brazil), or
• a combination of the above factors (e.g., Bolivia and Peru).
For many developing countries, privatization is currently the most important item on the
agenda for transforming the telecommunication sect or. In the long run, however, opening markets to
competition will almost certainly be more sign ificant and profound. Aware of this, more and more
countries are beginning to wrestle with the complicated developments that are set in motion when agovernment pursues a policy of both privatizing and opening the market to the entry of new carriers.
For instance, liberalization of the domestic market will tend to undermine the potential sales
price of the state-owned carrier because of the loss of the carrier’s monopoly position. On the other
hand, undertaking privatization first typically entails a request by investors for exclusivity in the local
market for a certain period of time - thereby erodin g the potential benefits of competition. For these
reasons, countries have either chosen to privatize or liberalize their domestic market first, largely on
the basis of their particular economic situation.
Countries facing economic difficulties generally choose to privatize first, because of the
immediate benefits to the government of a considerable amount of incoming capital. Countries
benefiting from economic growth, on the other hand, are more likely to open various segments of thelocal market to competition, leaving the possibility of selling the national carrier to a later stage. The
correlation between the performance of the national economy and the order of privatization versus
liberalization goes a long way in explaining why most of Latin America pursued privatization first,
while most countries in the Asia-Pacific region have liberalized segments of their markets while
maintaining the incumbent carrier as a state-owned entity.
1.3 Rise of separate regulatory agencies
Until recently, regulation of telecommunication services and, perhaps more importantly, who
controlled such regulation, was not an issue in most countries around the world. With the exception ofa handful of nations with competitive markets or those in which the monopoly services provider was
in private hands, the great majority of state-owned operators were under a regime of self-regulation.
Apart from devising policy for the sector, the national government - or, more precisely, the relevant
ministry - retained responsibility for both the provision and regulation of services. This meant that the
relevant ministry was in charge of macro-regu lation for the sector (maintaining a monopoly market
structure through which it could implement policy) with the monopoly operator responsible for micro-
regulation (monitoring quality of service, dealing with consumer complaints, tariff issues, and so on).
In the early 1980s, a few countries - namely the United Kingdom, the United States and Japan
- began to change the overall market and ownership profile of their telecommunication sector. The
UK government progressively sold its shares in both British Telecom and Cable & Wireless to private
investors, established a separate regulatory agency, Oftel, and opened its market to a second operator,Mercury. The US divested AT&T of its local operations and opened the long-distance and
international market to competitive entry. Japan privatized its incumbent carrier - Nippon Telegraph
and Telephone Public Corporation (NTT) and set the regulatory framework through NTT’s Corporate
Law and the Telecommunications Business Law.S/C/W/110/Add.4
Page 3
Throughout the late 1980s, similar liberalization and privatization initiatives began to emerge
elsewhere. Governments began to allow private investors and competing carriers into formerly
insulated domestic markets, but in a manner corresponding to national conditions and the unique
characteristics of the country. Thus, the late 1980s and early 1990s saw a wave of privatization
programmes in Latin America and some Eastern Eu ropean nations, while variations on competition
policy began to emerge in the Asia-Pacific from th e early 1990s. By the second half of the 1990s,
Western and Eastern Europe, as well as Sub-Saharan Africa and some Arab States, had begun to
embrace a range of telecommunication reform policies.
As the process of reform spread, many governments came to realize that an entire package of
new rulings and laws were often required to support the transition to a market structure - i.e., to “level
the playing field,” or ensure fair competition. In other words, the new profile of the industry hadbrought with it an urgent need for the development of separate and capable regulatory institutions.
Deregulation became, somewhat more aptly, re-regulation.
Figure 1.1: New laws adopted 1992-1997 and separate regulators
Source: ITU/BDT Regulatory Database.
Note:  Law in this instance may be a decree, a new law, a legislative amendment, etc.
As a result, since the late 1980s, a number of new, separate regulatory agencies have been
created around the world (see Figure 1.2, left hand chart). The institutional profile and capabilities of
these new bodies has, however, been uneven. The first regulatory bodies emerged, naturally, inmarkets which were first to introduce significant sectoral change. Thus, the mandate and scope of
agency responsibility paralleled the market reforms undertaken. In the few cases in which new,
separate regulatory institutions were created without parallel sectoral reforms, they have essentially
remained paper institutions, holding little more than formal powers.
Among the regulatory agencies that have been  separated from the incumbent carrier, it is
possible to identify two main types: the agency with no (or strictly limited) policy oversight from the
relevant ministry; and the agency, with a given mandate to regulate the sector, but with oversight by
the relevant ministry which retains the authority to  issue general directives and/or control funding.Percentage of laws adopted 1992-1997
Europe
40%
Asia-Pacific
14%Arab States
3%Am ericas
24%Africa
19%
Total 
countries: 
115Separate regulator
Africa
25%
Americas
25%
Arab
States
6%Asia-
Pacific
15%Europe
29%total: 72S/C/W/110/Add.4
Page 4
This latter model has been predominant in the emerging markets of Africa, Asia, the Arab States and
Eastern Europe.
In the Arab States, in particular, the relation between policy making and regulation is closer
than in other regions (see Figure 1.2). With regulatory reform a comparatively recent trend, only four
Arab States (Bahrain, Jordan, Sudan and most recently, Morocco) have established a separateregulatory entity. Other states, such as Egypt, have begun the process but have yet to formalize a
separate body. In Egypt, a five-member regulatory commission was created in 1994. However,
establishment of the new regulatory regime has been stalled while the government tries to find a way
to insulate the agency from political interference and to find effective mechanisms for conflict
resolution. With the forthcoming privatization of Telecom Egypt (Arento), pressure to resolve these
issues has increased.
Many of the same dilemmas can be identified in the Asia-Pacific region, where the relevant
ministry has tended to remain closely involved. Asia-Pacific countries are, however, further down the
road to regulatory reform having begun the process somewhat earlier than the Arab States. As a result,
there are already more established regulators (see Figure 1.2) and the momentum to create regulatory
agencies across the region is increasing. By the year 2000, the number of regulators in the region isexpected to have more than doubled from the 11 existing in 1997. Moreover, a number of the agencies
which have already been established - such as ACA in Australia and Ofta in the Hong Kong SAR
(Special Administrative Region)- have become models emulated elsewhere.
Figure 1.2: Separate, but increasingly standardized
Institutional status of regulatory bodies and adoption of WTO Reference Paper on regulatory
principles, by region
Source: ITU/BDT Regulatory Database  and WTO.
Note: The 72 countries which made commitments to the WTO Basic Telecom agreement can be
broken down as follows: 5 Afr, 23 Am, 2 Arb, 16 Asp, 12 Eur (with the EU countries counting
as one).
Africa and Europe appear to be at about the same level of progress in separating regulators
from the operators, with a little above 40 per cent of the countries in the respective regions havingStatus of the regulatory entity
0%10%20%30%40%50%60%70%80%90%
Africa Americas Arab
StatesAsia-
PacificEuropeSeparate
Not separate
0%10%20%30%40%50%60%70%80%90%100%
Africa Americas Arab
StatesAsia-
PacificEuropeCommitments
No commitmentsPercentage of countries
 that made offersAdoption of the reference paper by signatories
WTO Basic TelecommunicationsS/C/W/110/Add.4
Page 5
undertaken reform. However, averages can be deceiv ing, with Europe much further down the road to
independent regulation of the sector. In Africa, most of the regulatory bodies created have limited
responsibility, with the operator and the sector mi nistry continuing to control a number of regulatory
functions. In Uganda, for instance, the ministry remains responsible for tariff approval and the
establishment of licence fees; in Namibia, the operator remains responsible for numbering, tariff
proposal and approval, and for interconnection rates.
In the Americas, the mandate of the regulator has been far more specific. In North America,
the position and purpose of the regulator was further reaffirmed with the recent revamp of the
Telecommunications Acts in both Canada and the United States. In Latin America, the creation and
mandate of the regulator in many cases resulted  from the wave of privatizations in the region
beginning in the late 1980s; the creation of the regulator generally preceded a major overhaul of the
sector. Nevertheless, in Mexico, a separate regulator was created several years after privatization.And, in Chile, considered by many to be one of the most open telecommunication markets in the
world today, there is still no separate regulator.
2
In Europe, nearly all countries have separated the regulation of telecommunications from the
telecommunication operator. For the 15 EU countries,  EU law requires a separate authority from the
incumbent operator to be established. Outside the EU, the Czech Republic, Hungary, Iceland, Malta,
Norway and Switzerland have also established separate regulatory authorities. Elsewhere, regulation
remains the sole responsibility of a sectoral ministry. Delegation of regulatory powers to a regulatory
authority has varied across Europe. In all cases, regulatory separation involves a degree of
independence from direct ministerial control, but not always a high degree of autonomy in decisionmaking. Some European regulatory agencies, such as the Norwegian Telecommunication Authority,
have relatively limited control, with the relevant ministry retaining key regulatory powers. The  UK’s
Office of Telecommunications (Oftel), by contrast , has substantial powers, with the right to make
regulatory decisions on many issues. In practice, the Department of Trade and Industry (DTI)
delegates many of its powers to Oftel. However, on some important aspects of regulation, notablylicensing of new operators, the DTI has the ultimate authority.
The manner in which the regulatory body is established also appears to be particularly
important for the degree of autonomy. In South Africa, for example, the regulatory body consists of a
Council comprising a Chairperson along with at least three and not more than five councillors. Eachof the councillors is appointed by the South African President on the advice of the Parliamentary
committees on communications, with the law requiring that each commissioner possess certain
qualifications, thus acting to insulate the process from political interference. Insulation from the
political process is one of the most difficult aspects for the regulatory body to achieve.
The structure of the decision making body - for instance, whether the institution is headed by
a single person (e.g., a director general) or a collegiate body (e.g., a commission) - may possiblyinfluence the degree of potential independence of the agency. Collegiate bodies, such as those
established in the Americas (e.g., Argentina, Cana da, Ecuador, and the US), ought theoretically to be
better able to achieve autonomy owing to their diverse membership. A regulatory body headed by a
single person, such as is the case in Hong Kong SAR, Nicaragua, the United Kingdom and Venezuela,
may theoretically be easier to lobby and influence than a collegiate body. Nevertheless, in spite of thefact that the institutional lay-out of the regulatory agency does have an impact on its likely
independence, the level of real autonomy achieved by the regulatory body will depend just as much
upon random non-institutional factors such as the personality of the individuals involved, political and
institutional traditions in the country and the existing economic and political conditions.
While autonomy and independence have been raised as goals in the establishment of
regulatory agencies worldwide, some governments are equally concerned that autonomy of the agency
could itself lead to abuses of power. Some countries have therefore imposed a system of checks and
balances upon the regulator. In Côte d’Ivoire and Uganda, for instance, the regulatory mandate hasS/C/W/110/Add.4
Page 6
been divided among different agencies as a way of providing regulatory functions with a certain
degree of autonomy while avoiding the co ncentration of power within one body.
Despite the significant diversity that exists, both regionally and nationally, in terms of
institutional arrangements, powers, jurisdiction a nd mode of operation, the growing trend towards
standardization of regulatory agencies world-wide should also be recognized. This is particularly truefor those countries who, in their participation in the WTO Basic Telecommunications Agreement,
adopted - entirely or partially - the Reference Paper on regulatory principles.
The Reference Paper sets down regulatory requirements which must be pursued for a
domestic telecommunications market to comply with WTO trading principles. It requires, for
example, that the regulatory body be separate and not accountable to any operator of
telecommunication services. Actions and decisions of the regulator must be carried out in atransparent and non-discriminatory fashion - particularly so, in the allocation of scarce resources, such
as frequencies and numbers. Countries must also institute appropriate measures to prevent anti-
competitive practices, such as cross-subsidization. Interconnection must be allowed at any technically
feasible point on the network. The procedures for interconnection negotiations should be publicly
available and an interconnection dispute settlement mechanism should be instituted. The criteria,terms and conditions of licences should be publicly available.
Finally, it should be acknowledged that the emergence of separate regulatory agencies has
been delayed in some markets as a result of the regulatory dilemmas posed by the convergence of
telecommunication, broadcasting and computing. Public debate concerning convergence tends tosuggest that creation of a single regulator for all communication and information services would be
beneficial, but such a move is being contemplated in only a few countries. Furthermore, the few
regulatory agencies in which all communication services have been integrated under one jurisdiction -
as is the case with Canada and the United States - are not the product of recent convergence trends. In
the vast majority of countries, the regulation of telecommunication and broadcasting remains separate- and is likely to continue so - while computing st ill remains largely unregulated. However, there are
exceptions to this rule; South Africa, for example, was considering in early 1998 the merging of
telecommunication and broadcasting regulatory functions.
1.6 Key regulatory issues
The rise of private ownership and competitive markets has also increased the need for a closer
and more thorough control of carriers operating in the market. This has led to the emergence of a host
of new regulatory issues. Regulators are generally responsible for functions such as tariffing,
licensing, interconnection, monitoring service quality, and spectrum allocation. However, the
emphasis placed on each of these areas depends upon the national situation of reform and the policy
guidelines set by the respective policy making body. Consequently, different regulatory schemes haveemerged, with each national agency reflecting the particular local environment.  This section provides
a brief overview of some of the most relevant regulatory issues on the agenda today, and the way
various regions (and countries) are approaching them. A more detailed analysis of these subjects is
dealt with on a regional basis in the following chapters.
1.6.1 Interconnection
Interconnection-related issues are ranked by many countries as the single most important
problem in the development of a competitive marketplace for telecommunication services. By
contrast, in the Arab States, where competition is still at a low level, less than 20 per cent of countries
presently place any significant emphasis on interconnection issues.
3  A similar picture is found in the
Americas where a large number of markets still have a monopoly carrier or are in the early stages ofS/C/W/110/Add.4
Page 7
competition in non-core services. Only 30 per cent of administrations throughout the Americas
pointed to interconnection as a regulatory issue of relative importance.
However, in the Asia-Pacific region, where competition has been growing rapidly, almost half
of all countries pointed to interconnection issues as a top regulatory priority. A growing degree of
attention is found in Africa, where a number of c ountries are embracing liberalization. In Europe,
interconnection has equally been a highly contentious issue. New directives in the lead up to the 1998
liberalization date, required all operators which have more than 25 per cent market share to:
interconnect with other operators on a non-discriminatory basis; publish interconnect price lists; and
set cost-oriented interconnection prices.
Figure 1.5: …but, closer than before
Degree of competition in mobile cellular services and leased lines, by region
Source : ITU/BDT Regulatory Database.
1.6.2 Universal service
The concept of universal service varies more significantly between developed and developing
countries than across regions. In the developed countries, universal service is typically defined as a
telephone in every home, with regulation focused upon the provision of services to marginalized
groups in society: the elderly or infirm, the unemployed or the disabled. A number of developed
countries, Italy and Denmark for example, have required the operator to develop special telephone
services for the hearing impaired.
For many developing countries with low househ old teledensity, the provision of service to
every home remains a long-term objective. Thus, the focus has been on providing ‘universal access’
to a telephone. This has taken a variety of forms, such as village payphones, public call offices, and
urban and rural telecentres. The Latin American operators often had a universal service component
written into their licences, following privatization, as part of their network target requirements. In
Mexico, for example, Telmex was required to install a payphone in every town of more than 500
people by 1994. In Chile, no such requirement was made initially, but the government later moved to
establish a universal service fund targeting rural development. The regulatory department under the
ministry (SUBTEL) oversees administration of the fund which awards licences to the lowest bidder.0%10%20%30%40%50%60%70%80%90%
Africa America Arab
StatesAsia-
PacificEuropeWorld
averageMono poly
CompetitionDegree of competition in
 cellularDegree of competition in leased
0%10
%20
%30
%40
%50
%60
%70
%80
%90
%100
%
Africa America Arab
StatesAsia
PacificEurope WorldaverageMonopoly
Partial
competition
CompetitionS/C/W/110/Add.4
Page 8
Another approach, more prevalent in the Asia-Pacific, has been the “pairing” of newly-
awarded licence areas with the requirement to install a certain number of lines in less economically
attractive regions. In the Philippines, for example, five mobile cellular operators were required to
install 400,000 new lines over a five year period, while seven international gateway licensees were
required to install 300,000 new lines.
In Africa, there has been a greater focus on the development of community telecentres as
points of access. Community telecentres are premises equipped with information and communication
technology and services, such as stand alone and networked computers, printers, faxes, telephones,
photocopiers, and a number of new services, such as connections to the Internet and other public
networks and databases. They are open to the local community on a commercial basis not only for
use, but also for training and education.
One noteworthy development is that, while it is the developed countries that have focused in a
substantially greater fashion upon the provision of broadband services, the definition of universal
service remains focused upon traditional basic telephony. Developing countries, by contrast, include a
variety of other services within their basket of universal service: fax, data and, in many cases, Internetprovision.
1.6.3 Licensing
Most countries will increasingly have to focus on licensing issues as more service providers
enter the market. However, even in a number of developed markets, many incumbent operators do nothave a licence for the provision of services. In a number of developing nations that still hold a
monopoly in basic wireline services, licensing is only required for new entrants in non-basic services.
There is also increasing debate over how specific or broad a licence should be in terms of the type of
services being provided. The use of class-based licences and, having passed through the initial
transition phases to competition, whether to issue licences at all is increasingly open to question.
In Europe, some regulators have started to waive licensing requirements for certain services -
such as value-added services and leased lines. The 1997 European Union Licensing Directive has
reinforced this trend by requiring that licensin g authorities issue general authorizations to all
interested carriers, rather than issuing individual licences to each operator. In some Asian countries,national authorities have decided to grant multiple service licences.
4  In Africa, nations like Uganda
have opted for a categorization of major and minor licences.5
While multiservice licences may provide an incentive to new carriers, licence fees can
constitute a significant barrier to the expansion of services and networks. In India, certain geographic
regions have not attracted service bidders owing to high licence fees. In the Arab States, potential
market entrants cite high licence fees as an important factor holding back developments.6  However,
for many governments, the licensing process can be an attractive source of supplementary funds for
the national treasury.
1.6.4 Price control
In the past, tariffs were mainly controlled through rate of return policies. This is a pricing
regime under which the relevant body sets tariff ceilings for services based on a rate of return on
capita, which enables the company to run its operations, expand its network and services, and earn a
moderate profit for its owners sector entities or individuals.
In most countries with monopoly provision, price control is aimed at controlling the
incumbent’s profits. In the emerging competitive en vironment, price controls are aimed at ensuring
that the dominant carrier is not able to abuse its market power or adopt anti-competitive pricing
strategies. This is particularly true for basic wireline services where the incumbent carrier has strongS/C/W/110/Add.4
Page 9
leverage. Given this, it might be expected that price controls would be imposed only on the incumbent
operator. As the Asian countries have shown, however, in a large number of competitive markets,
price controls are imposed on both incumbents and competitive carriers.7  In non-basic services and
mobile services, most operators around the world are granted greater flexibility.
It is frequently assumed that as markets become more competitive, and the dominance of the
incumbent decreases, price controls become less relevant. Market mechanisms should replace price
controls in a competitive marketplace. This trend can be perceived in competitive markets like the
United Kingdom, where Oftel has progressively reduced the range of BT’s services that fall under
price cap regulation. In taking this decision, Oftel considered that BT’s dominance in certain
segments of the market had diminished and, therefore, price controls were no longer necessary.
The rise of competition has also triggered another sensitive pricing issue: rebalancing . The
European Commission has been particularly active through a number of rulings and regulations in
making sure that rebalancing - which was already well advanced among EU nations - was
implemented by January 1998, when full competition was allowed in most EU markets.8  Tariff
rebalancing is less dominant outside the EU countries. Eastern European countries as well as those in
other parts of the developing world have generally been reluctant to carry out tariff rebalancing. Manycountries in Africa, the Asia-Pacific, the Arab St ates, Latin America and the Caribbean derive more
than half of their revenues from international services. Rebalancing would inevitably see local tariffs
rise, the political consequences of which are not relished.
1.6.5 Spectrum management
Spectrum management has become an increasingly important regulatory function for two
main reasons: radio frequencies remain a limited resource; and mobile roaming and new technologies
(such as Wireless Local Loop [WLL]) benefit from regional, or standardized, frequency allocation.
Mismanagement can result in competitive advantage to an operator - usually the incumbent - and can
influence national standards selection decisions. Transparent, technology-neutral selection processesby the regulator serve to level the playing field for new market entrants. Additionally, as auctioning
becomes a more frequently used means of attracting private capital into the sector, the regulator’s role
in assessing and determining spectrum auction bids will correspondingly increase and broaden.
However, Australia, the United States and India have all experienced problems in fairly and
efficiently using spectrum auctions, with non-telecommunication groups able to distort the process.
The extent to which spectrum management has become a key regulatory issue therefore tends
to reflect the degree to which markets have opened to competitive entry. Thus, Europe and Asia are
the two regions to have given greatest attention to spectrum management so far. Europe has perhaps
gone furthest in introducing common international (intra-regional) policies for radio spectrum
management. At the EU level, specific legislation regarding the reservation of frequency bands for the
provision of mobile services such as GSM and DECT were enacted between 1987 and 1991.
In Asia, a key trend has been the migration from analogue to digital technologies. Analogue
mobile cellular radio systems utilize a comparatively high amount of bandwidth; as a result, territories
such as Hong Kong SAR, Singapore, Republic of Korea, Taiwan-China and Australia have been
attempting to migrate users from analogue to digital. The technology migration process is not easy,however, and operators can incur significant capital cost. For the process to be enacted fairly and
efficiently, the regulatory position needs to be transparent and impartial, so as to not favour one
operator over another.
Across the Americas, spectrum management has been increasing in importance, particularly
as more operators move into the mobile cellular sector, and also as new wireless technologies are
selected. The Arab States and Africa, however, have yet to devote significant attention to this issue.S/C/W/110/Add.4
Page 10
1.7 Conclusion
Regulatory reform in the telecommunication sector is not an end in itself, just as privatization
and corporatization are not of themselves solutions to inadequate telecommunication service. The
experiences of the late 1980s and early 1990s have shown that simply privatizing the national carrier
or allowing the introduction of competitive service provision will not in and of itself provide sustained
development.
In markets which have pursued reform agendas longest - Australia, the UK and the US - the
former dominant provider remains significantly  dominant, despite the regulator taking an
interventionist role. As a result, the worldwid e movement towards telecommunication deregulation
has become telecommunication re-regulation. An entire package of new rulings and laws are often
required to support the transition to competition. In other words, the new profile of the industry has
brought with it the urgent need for the development of a separate and capable regulatory agency toserve as the referee.
The message, therefore, is not the advocacy of re gulatory reform for the sake of reform but,
rather, the need to create the necessary framework for the achievement of an efficient and developed
telecommunication sector. Just as there are many diverse paths towards telecommunicationdevelopment, so too there are many paths towards the establishment of an appropriate regulatory
framework. This volume is an early effort to br ing these experiences together to highlight these
choices. The “reform recipe” is not defined but its key ingredients are apparent.
__________________________
1 Privatization is defined as the transfer of commerc ially oriented state-owned enterprises, activities, or
productive assets of the government to total, majority, or minority private ownership or private control.
2 Although a department within the ministry handles regulation. The government has announced its
intention to create a separate regulator by 1999.
3 The Permanent Telecommunication Committee of the League of Arab States (PTC) is nevertheless
devoting considerable energy and resources to interconnection-related matters.
4This approach increases the attractiveness of the licences granted and provides the operators with the
required flexibility to target those market segments in which they are stronger.
5In Uganda, major licences are issued by the ministry, while minor licences are issued by the regulator.
6 See Chapter 4, section 6.
7The only two Asia-Pacific economies where competing carriers are free from price controls on basic
wireline services are Australia and Hong Kong.
8Guiding principles are embodied in the cost-orientation and cost-accounting systems set by the
Commission in its Open Network Provision Directives.S/C/W/110/Add.4
Page 11
ATTACHMENT I
INTERNATIONAL TELECOMMUNICATION UNION
TELECOMMUNICATION
DEVELOPMENT BUREAU
ITU-D STUDY GROUPSDocument 1/193(Rev.1)-E
23 September 1997
Original: English
SECOND MEETING OF STUDY GROUP 1: GENEVA, 22 - 25 SEPTEMBER 1997
SECOND MEETING OF STUDY GROUP 2: GENEVA, 29 SEPTEMBER - 2 OCTOBER 1997
Question 2/1: Telecommunication policies and their repercussions at the level of institutional,
regulatory and operational aspects of services
STUDY GROUP 1
Working Party A/1
SOURCE: RAPPORTEUR FOR QUESTION 2/1
TITLE: RECOMMENDATION EMERGING FROM THE STUDY OF QUESTION 2/1
Document 1/181(Rev.1) contains the report of the study
________
ITU-D Study Group 1 meeting in Geneva, 22-25 September 1997,
recognizing
the sovereign right of each Member State to regulate its telecommunications and implementation of the ITU's
instruments,
recognizing also
the report by the Study Group on Question 2/1 "Telecommunication policies and their repercussions at the
level of institutional, regulatory and operational aspects of services",
taking into account
a)  relevant national laws and regulations, including those concerning licensing and frequency
assignments,
b)  the three regional policy papers, the African Green Paper, the Americas Blue Book and the Arab
Book, and decisions taken at regional telecommunication development conferences,
convinced
a) that legislative, structural and regulatory reforms in the telecommunication sector should be
considered with a view to favouring investments, increasing operating efficiency, broadening the supply ofservices to meet the objectives of universal access to basic telecommunications and improving service
quality; and
b)  that competitive conditions should be promoted as far as practicable, at least in the terminal
equipment, value-added services and cellular mobile markets,
c)  that an appropriate regulatory body be established,
d)  that telecommunication markets in many countries are taking on new dimensions, and regulatory
solutions tailored to these countries' real needs and possibilities are of critical importance.S/C/W/110/Add.4
Page 12
recommends
that governments and administrations take account of the following principles when establishing and
implementing their telecommunication development policies:
1) In order to restructure the sector on the basis of a number of objectives such as efficiency,
interoperability of telecommunication services, better access to services and improving quality of service,countries should:
• After clearly defining them, separate the incumbent operator's telecommunication regulatory
(and supervisory) functions from the operational and ownership functions.
• Allocate sufficient budgetary and management autonomy to the operator(s) to enable them to
act as commercial entities.
• Develop a stable legal and regulatory framework promoting:
– transparency of decision-making
– promotion of cost-orientated tariffs– encouragement of investment– provision of universal access/service
– fair competition
– innovation and development of the network– efficient use of scarce resources
• Encourage the development and management of human resources.
• Define the conditions for possible sale of shares in the incumbent operator.
• Begin liberalizing market segments such as te rminal equipment, value-added services, cellular
mobile services and other services based on new technologies.
2) The typical process of restructuring the telecommunication sector, the timing and manner of which
can vary, should include all or some of the following steps:
• high-level government commitment to commercialization/liberalization, as exemplified through
the establishment of a policy declaration, a strategic plan and/or the initiation of procedures for
the adoption of a new or amended law or legal framework;
• continuous development and management of human resources;
• separation of the postal and telecommunication operations, as well as of the operational,
regulatory and ownership functions;
• sufficient financial and management autonomy for the operator;
• consider sale of shares in or privatization of the  state-owned operator;
• establishment of an autonomous or independent regulatory body; and
• introduction of competition by allowing new entrants to compete with incumbents.
3) Various models exist for a country's regulatory body (e.g. self regulation, partially independent
body, fully independent body - see Annex 3). The typical functions of an autonomous regulatory bodyinclude rule-making and enforcement, licensing, and management of scarce resources. The regulatory body
should perform these functions in a transparent manner encouraging public participation. The regulatorybody should be autonomous when making its legal decisions and independent from the operator. In
performing these functions, the following are some of the key regulatory issues:
• Provision of service
•  Interconnection
• Universal access/service• Tariffing policies
• Frequency allocation and assignmentS/C/W/110/Add.4
Page 13
•B r o a d c a s t i n g
• Quality of service• Standardization/type approval• Numbering
• Competitive safeguards
4) The following lessons from the experience of countries which have introduced changes should be
considered:
•Be realistic  - Regulatory expertise is developed gradually. Although development of
telecommunications is essential to the overall development of the national economy, the
political system, legal framework and availability of human resources largely affect what canbe done in practice.
•Keep it simple  - Although instant regulatory expertise is not expected, the real challenge is to
identify critical regulatory functions. A clear statement of government policy and transparent,
non-discriminatory procedures are essential in  all phases of liberalization orcommercialization. Investors have shown remarkable tolerance for imperfect regulatory
arrangements if they have confidence that the re gulatory functions will be carried out in a fair
and open process.
•Use existing institutions and knowledge during the transition  - Existing oversight
mechanisms for business dealings, such as anti-trust and consumer protection laws, can play animportant role in establishing fair rules for telecommunication service providers. Avoid
excessive institution-building: a regulatory body with a limited scope of authority is sufficient
if it has adequate power to enforce its decisions and rules. The responsibilities and functions of
the regulatory body should mirror the evolution of the telecommunication sector.
•Rely on contracts  - Licences and contracts of sale can be effective tools to establish fair rules
for competition. Regulatory efforts during the transition from state to private enterprise  can
therefore be focused on defining transparent, non-discriminatory licensing and interconnection
regimes.
recommends further
that governments and administrations take into account the guidelines set out in the attached annexes 1, 2, 3
and 4 on general considerations, telecommunication sector reform, the regulatory body and regulating
spectrum management, when establishing, implementing and reviewing their national telecommunication
policies and regulations.S/C/W/110/Add.4
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ANNEX 1
General considerations
Major factors cited by developing countries as influencing the gradual implementation of
telecommunication reform, world trends apart, are:
• Telecommunication services are commercial, which therefore implies significant private-sector
participation.
• Shortage of sufficient government funds for infrastructure development.
• Termination of the monopoly, which may be ineffective in certain circumstances.• Creation of an enabling environment for inve stment in the telecommunication sector and for
manufacturing of telecommunication equipment, where appropriate.
Countries should keep in mind that the telecommunication infrastructure serves a broad public
interest because its existence promotes development of the overall economy and communications should be a
basic right of all people.
Countries should consider taking advantage of the rapid technological evolution in
telecommunications that has brought great opportuniti es for expanding penetration, lowering costs, and
upgrading services, thus giving developing countries an opportunity to leapfrog into advanced stages of
network development.
To encourage economic activity, a country's overall economic, social and political environment and
its regulatory framework must be sufficiently stable.
Referring to recommendations adopted by international bodies on liberalization makes it easier to
build a national consensus towards reforming the telecommunication sector.
All major reforms involve proper regulation, privat e-sector participation and competition. These key
elements are closely intertwined in telecommunications, and are essential for success of the reforms in terms
of the long-term ability to overcome past constraints on telecommunication development.
The following principles  should be taken into account when reforming the telecommunication
sector:
Transparency
Equitable regulation of the telecommunication sector requires that operators know what to expect.
The principles of transparency, objectivity and non-discrimination are applied so that all operators are
subject to the same conditions to achieve fair competition. For example, all licensing criteria, as well as the
period of time normally required to reach decisions, and the terms and conditions of the individual licences
should also be made publicly available.
Clearly defining objectives increases credibility as well as transparency and provides for faster
reform and implementation. Reaching those targets within a sector subject to such complicated dynamics, as
is the case of telecommunications, demands a clear understanding of how the sector should evolve.
Investment
It has become evident that the demand for tel ecommunication services surpasses the ability of
individual governments to pay for the development of a network to provide such services. If a country is toS/C/W/110/Add.4
Page 15
benefit from the growing number of services that are avai lable, it will need to find financial resources outside
of its national treasury. It will need to look for other means of financing, including private investment.
One of the prerequisite conditions to obtain investment is stability and assurances. To secure new
sources of capital, developing countries must address these issues as soon as possible.
Investment will be deterred if there are unacceptable market barriers that limit the commercial
opportunities that can be pursued or that otherwise place the new investor or operator at a disadvantage.
Domestic and foreign firms are deterred from investing because of political risk, the possibility of
expropriation of assets or profits, foreign exchange controls, and discretional taxation, as well as restrictionson capital repatriation for foreign firms.
The commitment to liberalization in international multilateral negotiations like the World Trade
Organization (WTO) signals to investors and lenders that their investments will be secure.
Provision of universal access/service
The provision of universal access/service should be one of the most important objectives of
telecommunication policy and legislation in developing  countries. The concept of universal access/service,
its content and the implementing policy may vary depending on a country's specific needs. The concept and
policy must be sufficiently flexible to adapt to the changing needs of the country concerned.
It is important for national governments to play an active role to ensure that the provision of
universal access/service is successful. However, it is also necessary for such governments to examine how
responsibilities can be appropriately allocated to telecommunication operators and local governments,
particularly in a competitive multi-operator environment.
There are different approaches to financing universal service obligations, some of which are:
• the telecommunication operator must provide service to rural and remote areas as a condition of the
licence;
• new competitors may be required to pay certain charges to interconnect with the dominant
telecommunication operator, with some or all of th e charges being used to provide service to rural
areas;
• a telecommunication operator may have the choice of paying certain charges into a universal
service fund or providing the service directly itself;
• when the incumbent telecommunication operator cannot or does not want to provide service to rural
or underserved areas, the opportunity will be given to other service providers to attain universal
access/service goals;
• a transparent government subsidy financed from its tax revenues that helps pay for service to
underserved and high-cost areas, including rural and remote areas.
Policies that encourage operators to provide telecommunications in unprofitable areas can be
implemented through government incentives.
Some of these incentive schemes may require relief from certain national income generation
responsibilities in order to enable investment to take  place. This is where governments play a major role by
offering incentives such as:
– Removing the duty on telecommunication equipment that may be targeted to specific or general
areas of telecommunication development.
– Tax concessions, which may take the form of a tax holiday for specific periods or could be geared
to a certain level of investment.
– Lifting foreign exchange restrictions and permitting free monetary policies.S/C/W/110/Add.4
Page 16
In all cases, these incentives should be implemented in a manner that stimulates investment.
If subsidies are used, it is important that the amount of subsidies and their specific application be
measurable, identifiable and transparent.
Any WTO Member State has the right to define the kind of universal service obligation it wishes to
maintain. Such obligations will not be regarded as anti-competitive per se , provided they are administered in
a transparent, non-discriminatory and competitively neutral manner and are not more burdensome than
necessary for the kind of universal service defined by the Member State.
Establishment of fair competition
Increasingly competitive markets moving to a gl obal scale bring new competitors in all industry
sectors, driving all players to increase efficiency, reduce costs and prices, increase economies of scale and
focus on their customers.
Assuming that some degree of liberalization a nd competition are contemplated, the following
activities must be undertaken:
– prevent or correct possible abuses of market power by the dominant telecommunication service
provider;
– enable new service providers to become operational;
– act as a surrogate for competition and maintain pressure on the dominant operator to perform well
until competitive pressures are sufficient to take over this role;
– support distributional goals such as service to disadvantaged geographical areas or segments of the
society.
If competition is to remain transparent, fair and sustainable in the long term, it is worth considering
the possibility of shifting from a policy of indiscriminately applied cross-subsidies to a policy of declared
subsidies applicable to specific cases. Examples include the granting of a certain level of service free-of-charge to low-income users or the construction of networks in areas that are not yet covered.
Innovation and development of the network
Innovation and development of telecommunication networks and services should be left primarily to
market forces. Regulation, in this context, should promote innovation and development, inter alia , through:
• fast and clear standardization processes;
• unambiguous interconnection interface definitions;
• freedom to select the appropriate technology.
Regulatory body
An independent regulatory body that is separate from, and not accountable to, any supplier of
telecommunication services ensures that telecommunicatio n services will be provided in a way that serves
the public interest. The regulatory body should establish, within the framework of national legislation and
having regard to international rules, processes for re gulating the market and monitoring application of the
regulations in force. The decisions taken should be impartial with respect to all market participants.
Personnel at the regulatory body are best able to be impartial if they do not have a personal or financial
interest in the entities which they regulate or oversee.S/C/W/110/Add.4
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ANNEX 2
Guidelines on telecommunication sector reform
Strong commitments from top levels of government are essential for any reform process to begin and
for the reform to succeed. The political and economic environment of the country thus essentially sets the
stage for the design of telecommunication reforms.
The pace of reform and the extent to which its potential benefits can be harnessed will ultimately be
contingent on the capability of governments to create an environment that promotes efficiency and enables,
inter alia , private investment and initiative.
Government disengagement from direct interv ention in the telecommunication economy through
close control of the sector, towards a system largely driven by market forces and competitive regulation, is
one of the main conditions for successful restructuring. The necessary changes can be achieved more
effectively through private-sector participation.
Regulatory reform for telecommunications and the resulting institutions will reflect the broader
environment of the state or country, and its historical legal, social, political, and economic foundations. The
unique national circumstances will modify or influence the method of reforming telecommunications in each
country.
The task of beginning to construct basic regula tory processes should encompass the following
actions:
1) develop a government policy for the telecommunication sector (or broader information sector);
2) translate the policy into new or modified legislation or decrees;3) create a regulatory body with a clearly defined mandate;
4) design the method of funding for the regulatory body in such a way that the body established is
independent in its decision-making;
5) establish conditions and procedures to be followed by the regulatory body in dealing with matters
within its jurisdiction.
Strategic plan
The first and most critical step of developing a government policy for the telecommunication sector
(or broader information sector) requires the government clearly to establish a set of basic objectives, both
short and long term, for the sector. This strategic planning exercise, which should be the result of a publicdebate, should address issues such as:
1) a set of policy objectives and plans related to greater commercialization of national and
international telecommunication services, to form an integral part of a policy for liberalization of
the sector, with specific objectives;
2) a set of policies, objectives, and related plans to divide regulatory responsibility between the prime
minister/minister/ministry/government and the regu latory body for functions such as rule-making
and enforcement, licensing and management of scarce resources, and for areas of jurisdiction such
as application and oversight of rules governing interconnection and tariff approval;
3) publicize the government telecommunication policy paper which incorporates some of the above
plans and objectives, and includes a description of the relationship between the government and theregulator.S/C/W/110/Add.4
Page 18
The strategic plan should take account of the following factors:
1) the social benefits, including improvements in health-care, education or overall quality of life;
2) optimal funding arrangements for the sector;3) technologies which can be integrated easily into  the existing network and lend themselves to fairly
rapid implementation, while nevertheless offering  a wide range of applications, and which are
future-oriented;
4) cost-orientated tariff structures and levels, as part of the planning process;
5) continuous monitoring of changing needs and demands.
Human resource development
Successful regulatory reform requires strong re gulatory leadership committed to serving the public
interest; good management of the regulatory process, including knowledge of the sector; and qualified
professional staff in the various related disciplines.
Core personnel may be recruited from the sector ministry. The ITU, regional telecommunication
organizations and other interested parties should establish a joint training programme to increase knowledgeof telecommunication policy, strategies and regulations. Funds for training activities may be generated
through the sector restructuring programmes of international financing organizations.
Legislative reforms
To implement sector reform, it is almost always necessary for a country to pass some kind of new or
amended telecommunication legislation. In some countries, constitutional changes are necessary, hence a
broad consensus in the society is needed to implement the reform.
Depending on its needs, each country must decide on the best form for the actual legislation. Some
countries may choose to introduce reforms more gradually by passing specific legislation that allows
competition in certain segments or sectors of the market. Other countries may introduce changes in an
entirely new law that sets forth a different framework for the telecommunication sector in the country.
Telecommunication legislation is most effective when it is broad and establishes the framework for
rules and regulations, which set forth the details of implementation (e.g. by ordinances or similar legal
instruments). The broader the legislation, the better the chance that it will be long-lasting.
Structural reforms
Despite the fact that service providers can choose from a broad range of approaches to ensure that
they are adequately financed as they move into the 21st century, there are certain basic structural attributes of
a telecommunication regime that are essential to attracting both domestic and foreign investment.
These structural changes are the ones that global, regional and local investors want to see as they
consider investing and the ones that the operator itself needs to adapt to in the new telecommunication
environment.
Commercializing operations
To operate more efficiently, telecommunication operating entities perform best when they are run as
a commercial business - irrespective of who owns them.
To encourage new service providers, with new sources of capital, to enter the telecommunication
market, there are a number of different actions that may be taken to restructure the sector, such as:S/C/W/110/Add.4
Page 19
a) dividing an existing nationwide monopoly into separate entities designated by geographic service
regions or offering different services;
b) providing by law that new services (or new technologies) will be outside the scope of the existing
monopoly, enabling new operators to provide these services on a competitive basis;
c) authorizing the existing network operator to subcontract certain areas or services to third-party
service providers; and
d) entering into build-operate-transfer (BOT) arrangements (or an equivalent) with an experienced
third-party operator, ensuring that that expert suppo rt is available to train personnel and to supervise
the start-up operations.
Increasing private-sector participationa) Private-sector investment
Private investment is one possible source of tel ecommunication financing that may be appropriate to
an individual country's requirements.
The decision to introduce private investment gives the government the chance to match its
telecommunication needs with the development plans of investors (e.g. through the sale to private investors
by the government of a minority or controlling share of a sole incumbent operator or the granting of a licence
to provide public telecommunication services).
Governments frequently impose certain obligations on an exclusive licensee, such as building out the
network within a specified time-frame, to justify its exclusivity. Issues that should be addressed include:
a) level of investment required to meet public/social needs, including universal service obligations;b) projected timetable for recovery of investment by the operator;
c) ability for the operator to face up to competition in other segments of the telecommunication market
during the investment recovery period; and
d) termination date of any period of exclusivity and actions needed to ensure smooth transition to
competition.
The government's objective in its discussions with prospective investors should be to limit the scope
of exclusivity, both in time and nature of services involved; to define clearly the investment and service
obligations assumed by the licensee; and to protect its ability to revoke the exclusive licence if the
obligations are not fulfilled.
If clear conditions are established in this process, a firm foundation may be built for the introduction
of more or even full competition at a date certain in the future.
It is also important to establish clearly the mechanisms by which state power is to be retained with
respect to participation in intergovernmental organizations.
b) Privatization
Privatization is a complex process of introducing private capital and know-how in
telecommunication operations, and there is more than one way to time and sequence this process effectively.
Successful privatization of a state telecommunication enterprise depends on a number of factors falling into
place:
• Privatization must be supported by the political process.
• The timing and modality of privatization in a given country is largely conditioned by relatively
narrow and somewhat unpredictable windows of political opportunity and by broader developmentsin economic strategy.S/C/W/110/Add.4
Page 20
• At an early stage, the government must clarify its position regarding trade-offs among conflicting
interests arising from privatization, such as among existing operators, employees, prospective
buyers, potential competitors, investment bankers, the treasury, equipment suppliers, large users,
and the public at large.
Internal reorganization of the enterprise may be undertaken before privatization to enhance the
company's value or this reorganization may be left to  the new owners. Management contracts could be used
to run the enterprise along private business lines, followed later by privatization of assets.
If privatization is chosen, the following facets of the privatization process can be distinguished:
• separating telecommunication operations from non-telecommunication activities (for example,
posts, manufacturing);
• corporatization, i.e. restructuring telecommunication operations as an independent state enterprise
that is administratively and financially autonomous from the central government;
• internally reorganizing the enterprise in ways that are suited for running it as a business;
• reorganizing the telecommunication enterprise under private company law;
• devising a strategy for privatization or sale of shares including decisions on controlling interest,
employee stock ownership, tranching of stock sale s, and residual state ownership, as well as
changing the company's capital structure to enable implementation of this strategy;
• executing the sale.
It is also necessary to decide on how, and on the procedures according to which, the government or
regulatory body will check that the privatized comp any is fulfilling the commitments made during the
privatization process.
Competition
The introduction of competition is not necessarily associated with privatization. Competition can be
introduced for all or certain market segments, and can range from duopolies (i.e. two providers) to an
unlimited number of service providers.
It is generally recommended to establish a regulatory body to determine the rules of the game before
licensing competitive service providers. The regulator must prescribe conditions for easy entry of operators
at various levels from network operations to individual value-added services. It may also be necessary to
protect new entrants from unhealthy competitive practices and prescribe suitable conditions for
interconnection with the networks of the dominant operator(s).
Regulatory reforms
Whatever the specific regulatory structure, successful regulatory reform requires:
1) political will in the government to make it work;
2) strong regulatory leadership committed to serving the public interest;3) good management of the regulatory process, including knowledge of the sector;
4) qualified professional staff in the various related disciplines;
5) fair and open decision-making mechanisms accessible to all the parties affected; and6) actions that respond to the broad political goals of the government.S/C/W/110/Add.4
Page 21
Establishment of a regulatory body
Incorporating the key objectives for the country's telecommunication sector into the legislative
mandate establishing the regulatory body is a sound approach for passing a clear and concise message from
the government to the regulator.
When establishing the regulatory body, an essential consideration is budgetary autonomy and
sufficiency.
Funding may be generated from a general assessment on all regulated operators through annual
licensing fees, regulatory user fees, spectrum usage fees, etc.
The evolution of the regulatory body should parallel the development of the sector as the
telecommunication market becomes more competitive.
Certain periodic duties may be contracted out to expert consulting entities, or specific expertise from
more developed regulatory bodies in more mature economies may be retained to provide short-term
assistance to newly formed and developing bodies.
For additional information, refer to Annex 3.S/C/W/110/Add.4
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ANNEX 3
Guidelines on the regulatory body
It is widely accepted that a government's regulatory functions should be separated from its
operational and ownership functions.
The regulatory body may take a variety of forms, ranging from an office within a larger executive
branch entity (or ministry) to a separate agency whose actions are reviewable only by the judicial system:
a) a regulatory department  within the ministry separate from the policy-making and the ownership
functions;
b) a separate regulatory body  reporting to the ministry or prime minister's office;
c) an independent commission  or regulatory body, where the term "independent" refers to its reporting
procedure and its funding;
d) no telecommunication regulatory body  - telecommunications are regulated generally under anti-
trust, competition and consumer rules and regulations, etc.
Locating the regulatory function within a ministry (case a), rather than in an autonomous agency,
may make regulation more responsive to broad government policy directions. However, this must be
balanced against the risk that the ruling powers may co -opt the regulator for self-serving political purposes,
which may not be consistent with developing truly open and competitive markets or with effectively
controlling the operator of monopoly services. As the regulator, the ministry is, above all, responsible for fair
competition; in a way, it acts as a referee vis-à-vis all market players involved.
In some countries, the regulatory function is divided among several ministries, e.g.:
– ministry of transport, posts and telecommunications determines policy and conditions for
telecommunication services provision, and has the authority to license certain services;
– ministry of finance, in conjunction with the ministry responsible, determines tariffs in the area,
where a monopoly is still present or where an operator has a dominant position;
– ministry of trade or commerce is often the representative to WTO and has the responsibility for
making commitments to liberalize telecommunication equipment and services,
– ministry of justice makes determinations regarding legal matters,
– ministry of information is often responsible for broadcasting and media.
Locating the telecommunication regulatory authority in a separate or independent agency (cases b
and c) that is at least partly insulated from party politics and changes of government is more likely to check
these forces and be conducive to increasing investor certainty and reducing investor risk and, thereby,
promoting the legal and regulatory atmosphere that encourages investment to meet demand.
Autonomy can be enhanced by full public exposure of all regulatory actions, rules that restrict
channels for the government to insert its political will  in the regulatory agency's decisions, and financing that
is independent from the annual budgetary cycle.
Policy and legislative formulation is typically incumbent upon the government through its ministry.
In cases where a formal regulatory function is init ially introduced and issues such as liberalization,
corporatization and privatization are addressed for the first time, it may be prudent for a government to
phase-in regulatory responsibilities gradually in parallel with the liberalization process.S/C/W/110/Add.4
Page 23
The presence of certain characteristics further strengthens the regulatory authority's independence:
• sufficient budgetary autonomy and resources;
• senior officials that are appointed for a fixed term and are removable prior to the expiration of the
term only for grave fault or serious crimes; and
• rules of eligibility and conduct for senior officials and key staff that emphasize financial
independence from entities under the body's jurisdiction, and encourage selection of individualswith relevant experience.
The regulatory body's independence from outside financial interests and partisan politics also affects
its ability to act effectively and inspire public confidence.
The regulatory body should be empowered to exercise broad discretion in the regulatory methods it
selects, for example, issuing licences for services, operators or facilities, such as telephony, mobile, satellite
and broadcasting. This discretion would also include the authority not to impose administrative requirements
on certain types of services, operators or facilities.
Typical regulatory functions
Rule-making and enforcement
Prior to making new rules or changing existing rules or regulations, a regulator may enter into a rule-
making process. This can be initiated by sources outs ide the regulator or by the regulator itself. A typical
first step in a rule-making is a request or petition for rule-making which is made public, and all interested
parties are asked to comment. After reviewing commen ts, the regulator can issue a proposed rule-making
proposing specific rules and requesting public comment. Once the rule-making proceeding is completed, the
regulator decides whether to amend its rules/regulations or to make a new rule.
To enable the regulatory body to carry out enforcement functions, the regulator must be given
investigative powers and the authority to impose appropriate sanctions and penalties for violations of the
telecommunication laws and regulations. Such sanctions or penalties can include fines, or revocation of
licences/authorizations, etc.
Licensing
Authority to license may be with the sector ministry, with the regulator, or divided between them.If the sector ministry has the authority to license, licensing would be considered to be the exclusive
right of the minister and a matter of public policy. With a division of the licensing function, the ministry may
determine the degree of liberalization and in which mark et segments, while the regulator will determine the
number of entrants and the related terms and conditions.
Another option is to grant the minister the authority to give either general or specific directions to the
regulator on licensing matters.
A further option is to segment the licensing process by differentiating the approval procedures based
on the type of licence to be granted. Under this option, approval for value-added service providers could be
granted by the regulator pursuant to a government policy objective to liberalize that particular market
segment.
There are four types of licensing procedures:
• Free regime
• Registration and other similar regimes
• Class licence or blanket licenceS/C/W/110/Add.4
Page 24
• Individual licence.
Two kinds of conditions can be imposed on the applicant or licensee:
• Qualifying conditions, which must be met by the service provider in order to be authorized to
provide the service.
• Operating conditions, which are rules that must be complied with while providing the service.
Management of scarce resources
Management of scarce resources (e.g. frequencies, numbers, and orbital positions) is an important,
permanent element of the national regulatory framework. Procedures for the allocation and use of scarce
resources must be objective, timely, transparent and non-discriminatory. To have a mutual understanding, acommon economic definition should be elaborated for the limited resources.
The different types of limited resources require different management techniques for their efficient
use:
• natural scarce resources,  like frequencies or orbital positions, may require usage fees and global
coordination. Most natural resources should be distributed among countries by consensus based on
existing and expected future usage;
• contemporary scarce resources , like calling numbers and broadcasting sites, require national,
regional and global coordination;
• technology dependent bottlenecks,  like shortage of conduits and cable capacity, should be handled
under the principle of open network obligation.
Key regulatory issues
Provision of service
The process to select a service provider  typically involves the following steps:
1) Public announcement that the independent regulatory body or the equivalent will be initiating a
process to select a licensee to provide a given telecommunication service, including the selectioncriteria,
2) All interested parties would have a reasonable peri od of time within which to apply for the licence,
or make suggestions or inquiries,
3) The regulatory body, applying appropriate sele ction methods, would announce its decision of who
will be granted licences,
4) Any interested party that considers the decision unjust would have the right to appeal against the
decision directly to the regulatory body or to a higher body. Judicial remedy would also be
available.
Interconnection
Because the interconnection of one network to another is what allows the subscribers of one network
to be able to communicate with the subscribers of another, the interconnection of different supplier networks
is fundamental to instituting a competitive environment.
In a fully competitive market, the regulator will st ill maintain the arbitrator role for interconnection
agreements. Any dispute relating to negotiations on an interconnection agreement between two operators
may be referred jointly to the regulatory body for se ttlement. The regulatory authority shall decide on the
case, taking into due consideration the interests of both parties. Also, where no interconnection agreement is
reached between operators, either of the parties concerned may appeal to the regulatory body.S/C/W/110/Add.4
Page 25
Of course, in any decision the regulatory body shall take into due consideration the interests of the
users and the entrepreneurial freedom of each operator to configure its own network.
Further objectives need to be addressed such as: unbundled access to all network elements, including
unbundled access to the local loop, requirements of housing on an operator's premises the equipment
necessary for use of the offering ("physical collocation") and by granting the user access to the equipment at
any time.
Interconnection to the state-owned firm or dominant network operator should be at transparent, non-
discriminatory, cost-based rates, and on terms and conditions that are reasonable and fair.
It is also advisable for the regulator to require interconnection to be equal in type and quality to that
provided to the dominant public network operator for competitive services, and that interconnection be
priced not higher than that provided by the dominant operator to itself or its subsidiaries.
Universal access/service
Typically, governments impose some universal access/service obligations on telecommunication
operators, in the form of objectives or parameters for quality of service, ceilings on tariffs, payphones in
rural areas, provision of emergency services, etc.
The role of ensuring that the provision of universal access/service is successful is linked to the
regulator's enforcement function. However, its definition as well as the procedures should be as simple as
possible.
Regulatory policy can promote cost-effective progress towards the achievement of universal
service/access goals in a variety of ways. Choices must be made among the alternative regulatory approaches
at several different levels, varying from the broad strategic level to many important matters of detail.
In general, there are six approaches that a regulator can take to translate its vision of universal
access/service into practical regulatory policy:
1) broad regulatory oversight;
2) detailed direction by the regulator of universal access/service activities;3) broad regulatory oversight without payment of cross-subsidy by new operators;
4) broad regulatory oversight with bundled cross-subsidy mechanisms;
5) detailed direction by the regulator of universal access/service activities, with explicit but bundled
funding mechanisms;
6) broad regulatory oversight with unbundled funding mechanisms.
Tariffing
Usually, operators should file tariffs for services that are regulated by the regulatory body. The
tariffs should be published, thereby reducing the possibility of discrimination.
The regulatory authority should intervene if an operator abuses its dominant position.To make a competitive regime possible, suitably rebalanced, cost-orientated tariffs are required.
Factors to be taken into consideration include the granting of appropriate service areas to local
operators, the application of adequate rules for carriage between different urban areas, the establishment of a
reasonable access charge (i.e. the charge that long-distance operators have to pay to the local operator toS/C/W/110/Add.4
Page 26
originate or terminate calls), and possibly, in light of the rebalancing referred to above, the introduction of
higher tariffs for local communications and truly cost-orientated accounting rates, which would permit fair
competition in domestic long-distance and international traffic.
Frequency allocation and assignment
The prime objective of national spectrum management is to enable a country to manage effectively
its use of the finite resources of the radio-frequency spectrum and satellite orbits, within the framework of
ITU treaty obligations. Regulation regarding the use of the spectrum should be targeted at:
• giving effect to international obligations;
• defining and implementing overall spectrum strategy;
• promoting competition and innovation; and
• ensuring fair and open access to spectrum for a diversity of users, including small businesses,
essential services, and cultural, scientific and social uses.
For additional information, refer to Annex 4.
Broadcasting
Broadcasting, which is handled differently in different countries, can be covered by the general
telecommunication law or in separate legislation. For some countries, the transmission of the broadcastingsignal falls under the telecommunication law, but content issues are dealt with in other legislation.
Consequently, the responsibility of the telecommunication regulator varies from spectrum manager to the
general supervision of broadcasting, including licensing the service provider.
In countries where traditional broadcasting (freely received by the public) continues to be one of the
primary sources of information, education and entertainment, it is essential that a balanced and fair
relationship be established between these and other audio and video distribution services.
A challenge for governments is to facilitate the introduction of new services for users that result in
more diversity of programming, information and choices, while at the same time preserving free over-the-airbroadcasting.
Unless a given country has adequate mechanisms or other legal means of ensuring balanced
coverage of events such as elections, it may be prudent to have corresponding provisions in the framework of
the telecommunication legislation.
The legislation and the regulatory body should avoid encroaching on the freedom of expression of
the broadcaster. The broadcaster is also normally requ ired to cover issues that are of importance to the
community it is licensed to serve. This very delicate matter involves freedom of expression and is up to each
country to produce legislation to provide optimum protection of the public and social interest.
With respect to cable TV, the legislation may establish parameters and procedures and indicate in
each case where the regulatory responsibilities lie.
Quality of service
Regulation of the quality of services offered by a dominant or monopoly enterprise is a necessary
complement to tariff regulation.. For the sake of customer protection, a set of customer oriented parameters
should be defined to ensure quality of service (e.g. installation and repair time).S/C/W/110/Add.4
Page 27
Standardization/type approval
Standardization is becoming an increasingly important economic factor in telecommunications. It
plays a crucial role in determining the cost and pace of developing new innovative telecommunication
services. The integration of telecommunication infrastructures throughout the world requires thatinteroperable standards be used, as far as possible. The main focus in telecommunications is put on
harmonization required for designing networks and services. The influence on sovereign concerns with
regard to worldwide standardization has also increased.
The approval, placement and availability of telecommunication equipment on the market, its
compliance with essential requirements, and its connection to public telecommunication networks may also
be assigned to the regulator.
Numbering
Numbers are needed for the provision of switch ed telecommunication services, including switched
telephone services and packet-switched data communicatio ns, etc. The government or its designate, taking
into consideration ITU Recommendations in this doma in, must administer the numbering plan and allocate
numbers to operators and service providers in such a way that competition is not affected. The providers of
switched services should be able to obtain numbers from the relevant authorities by means of a transparent
and non-discriminatory procedure.
Number allocation should occur on the basis of long-term plans drawn up by the government. The
plans will seek to ensure, as far as possible, that certain applications are recognizable in certain numbers (e.g.
special call rates).
One important issue likely to arise in the near future is number portability (i.e. the opportunity for
end-users to retain the same number when they switch to  another operator). Such a system is beneficial to the
user and promotes competition.
Competitive safeguards
Competitive safeguards are necessary to ensure that dominant or major suppliers do not engage in
anti-competitive cross-subsidization, do not use information in an anti-competitive manner, and do notwithhold essential technical and commercial information.S/C/W/110/Add.4
Page 28
ANNEX 4
Guidelines for regulating spectrum management
The prime objective of national frequency management is to enable a country to manage effectively
its use of the finite resources of the radio-frequency spectrum and satellite orbits, within the framework of
ITU treaty obligations
The general model for spectrum management organizations is a central authority responsible for
national coordination of all frequency use and international representation, with responsibility for specialized
government use (e.g. defence) delegated to the department concerned.
For civil use, the spectrum management authority may either undertake all the functions described in
this annex, or delegate specific functions to organizations in the private sector or special user groups.
Delegation of some routine functions such as frequency assignment and licensing to spectrum management
organizations which have a direct financial or operational interest in the use of spectrum may provide the
incentive to improve spectrum efficiency and respond better to the needs of end-users.
There is a need for an identifiable authority in each country having the necessary legal powers and
resources to carry out spectrum management functions. The organizational structure may differ from country
to country according to particular requirements and resources but the following functions will need to be
undertaken.
1) Strategic national spectrum planning
The primary goal of strategic national spectrum planning is to determine and periodically update the
existing and future requirements for the various radiocommunication services. From this information, long-
term national policy and plans relating to the use of the radio spectrum can be developed taking into account
factors such as general government policy initiatives, advances in technology, and major changes in user
requirements.
Technical and economic studies related to the use of the radio spectrum are important to assist the
development of strategic plans and policy. Research should be targeted both to extend the usable spectrum,
as new technologies develop, and to make greater use of existing spectrum through better sharing and more
efficient modulation and coding techniques.
2) International representation, frequency coordination and technical cooperation
Frequency management cannot be considered in national isolation because of the international nature
of radiocommunications. In order to promote and safeguard national interests relating to
radiocommunications, participation and representation in world and regional radiocommunicationconferences of ITU is important, since the Final Acts of such conferences have treaty status.
International frequency coordination is necessary for many services in order to minimize the
possibility of interference with the services of other countries. For some services (especially satellite
networks) the ITU Radio Regulations require administrations to undertake notification and coordinationprocedures via the ITU Radiocommunication Bureau. For other services, bilateral or multilateral
arrangements with neighbouring countries may be established to simplify coordination of frequency use in
border areas.
A broad oversight of the work of international organizations responsible for the preparation of radio
equipment and planning standards should be maintained, although a more detailed involvement is necessaryS/C/W/110/Add.4
Page 29
for those parts of standards which have an impact on the efficient use of the spectrum and, in certain cases,
interoperability.
3) National coordination of frequency allocations
A table of national frequency allocations should be established, in accordance with national
priorities, to contain the detailed subdivision of frequency bands for particular categories of services, for
example, emergency, government, public and private-sector services. Appropriate interdepartmental and
public consultative machinery must be established to review and make changes to the table which may be
required as a result of the outcome from strategic planning exercises or world or regional
radiocommunication conferences.
4) Standards-making and conformity assessment
The technical analysis of requests for frequency assignments takes into account planning standards
(concerned with the overall system performance requirements) and radio equipment standards (concerned
with equipment technical characteristics). The use of some standards is an international requirement (in
particular for safety-of-life services) or a national requirement.
In the development of standards, those aspects which have an interaction with the efficient use of the
spectrum should be agreed between frequency managers, users and industry.
Some form of assessment for conformity with standards is required. This will usually involve the
establishment and authorization of one or more laboratories capable of providing conformance assessment
services.
5) Assignment of frequencies and licensing
The assignment of frequencies to stations in accordance with the agreed national allocations for
particular user categories is a routine process of application, technical analysis, assignment and recording in
a (national) frequency register. For some services, there may be international frequency coordination
obligations.
Licensing is the final part of the process which gives the licensee legal authority to use the frequency
in accordance with the licence conditions. Fees are normally charged for the issue of a licence.
6) Spectrum pricing
The aim of spectrum pricing is to ensure, in the interests of spectrum efficiency, and of increasing
the economic benefits derived from radio, that users pay an amount for spectrum that more closely matches
the cost of its national and international management or the value that they, or alternative users, place uponit. They will also take the value of the spectrum into account at the time they make investment decisions, for
example, on whether to invest in more spectrum-efficient technology, to move to a less congested band or to
switch to an alternative service or communication medium. It should be noted, however, that there are
differing views with regard to spectrum pricing, whether it should take place at all in some parts of the radio
spectrum, and if it does, who should pay, what spectrum should be priced (e.g. domestic versus internationalservices), and what spectrum pricing model should be used. This matter is under study in the ITU-R.
7) Monitoring and enforcement
Monitoring is closely associated with inspection and compliance in that it enables the identification
of interference sources, the verification of proper technical and operational characteristics of radiated signalsand the detection of illegal transmitters.S/C/W/110/Add.4
Page 30
ATTACHMENT II
Q. 6/1 Interconnection
1 Statement of Problem
The key to development of a telecommunication infrastructure and to the promotion of competition
generally is the determination of an interconnection framework and interconnection charges. Interconnection
is essential for new entrants, as it is the only way to reach customers of existing telecommunication
networks. The pricing of interconnection, unbundling the network and the basis for establishing
interconnection arrangements are the critical factors affecting the speed with which competition and choice
develop in a liberalized telecommunications market. This is the case regardless of the competitive model
which is adopted or the Member State's level of economic development.
This Question is directed toward providing details and practical suggestions for implementation of
interconnection regimes in an increasingly competitiv e market for telecommunications services. In fact, as
the developing countries open up their telecommunications sector for competition, the incumbent
telecommunications operators will be required to provide the necessary communication facilities withoutdiscrimination and at fair prices.
Many new issues provoked by these facts did not exist in a monopoly status. The international
telecommunications operators will be keen to enter into these markets, and due to their long experience in
competitive markets and negotiation skills, they may put the incumbent operators at a disadvantage while
negotiating the interconnection agreement.
Many developing countries are not prepared to face these changes. With the pressure of
liberalization, it is becoming crucial that the developing countries have the tools necessary to handle these
changes. Setting interconnection charges, establishing cost accounting systems, defining the scope ofinterconnection and making sure that interconnection is actually available at any technically feasible point of
the network are all practical problems facing ITU Member States.
2 Question or issue proposed for study
The study group should establish a set of best practice guidelines for countries to take into
consideration when developing policies, legislation and regulations to address the critically important issues
involving interconnection. The study group should build on the work already done for Questions 2/1 and 3/1
for the 1994-1998 study period and other available materials. To establish best practice guidelines, the study
group should:
1) Describe the legislative and regulatory framework that would be needed to implement appropriate
interconnection arrangements, unbundling, collocation, and interconnection pricing. Identify the
technical facilities major suppliers are required to provide in order to offer interconnection to newcompetitors.
2) Identify the most common approaches for interconnection pricing, cost accounting, unbundling,
describing the advantages and disadvantages of each approach thereby taking into account the
guiding principles for interconnection pricing, such as cost-orientation[, long-run incrementalcosting] and transparency.
3) Identify the most common approaches for arriving at interconnection arrangements, including those
set by the regulator and those arrived at through commercial negotiations. With regard to
commercial negotiations, identify the most common approaches to dispute resolution procedures,timetables for completion of negotiations, sanctions for failure to comply, likely outcomes if
regulatory arbitration or determination is necessary. Take into account the guiding principles forS/C/W/110/Add.4
Page 31
interconnection arrangements, such as non-discrimination, transparency, publication of
interconnection charges, availability of cost information.
4) Create a model interconnection agreement.
5) Provide for liaison with ITU-T study groups on key items to be identified, e.g.:
• Numbering plan of ITU-T SG 2 (E.164) with the new facilities (freephone, premium rate
services, international shared-cost services), the data country code of ITU-T SG 7 (X.121), the
SANC code assignment for Signalling Syst em No. 7 by ITU-T SG 11 (Q.708) and the non-
standard services and facilities of ITU-T SG 8 (T.35).
• Number portability as studied by ITU-T SGs 2 and 11. For the international freephone, there is
the ITU-T database for assignment.
• The interconnection, the establishment of interfaces, the access to networks, and interworking
are being studied by ITU-T SGs 2, 11, 13, and 15 - technical standards have already been
developed.
3 Description of Expected Output
The output produced during the study of the question should be divided into two stages. The first
stage would be mainly descriptive and would provide an overview of currently existing approaches to
interconnection pricing, unbundling and interconnection arrangements. This information would provide
background on alternatives for achieving interconnection objectives for government officials and
telecommunication operators. This information would also serve as a framework for developing detailed
procedures to implement an effective interconnection regime. It could also serve as a stimulus for legislative
or regulatory action to address the issues associated with interconnection.
The second stage would focus on practical information that would be directly applicable to
regulators, administrators and telecommunication operators at the working level in order to implement and
operate an interconnection regime. The information obtain ed during the first stage would be used to establish
best practice guidelines and recommendations for de termining interconnection pricing, implementing cost
accounting and unbundling requirements, establishing interconnection arrangements either through
regulatory action or commercial negotiation, and creating dispute settlement procedures and models of
regulatory intervention in those disputes.
4 Required Timing of Expected Output
Because the information gathered for the Question will be very useful for countries introducing
competition, it should be disseminated as early as possible and without waiting for a final work product. By
the end of the first year of the study period, the first stage of the output should be completed. The second
stage should be  distributed as soon as practicable after the first stage but not later than the third meeting of
the Study Group during the 1998-2002 study period.
5 Proposers/Sponsors of the Question
This Question is a result of the study of Question 2/1 during the study period 1994-1998. There was
a consensus that the issue of interconnection is of tremendous importance to all countries, particularly
developing countries, and that a study should continue on that particular aspect of Question 2/1.  Further, the
ITU World Telecommunication Policy Forum urged ITU Member States to share experience in the
implementation of WTO comm itments and invited the ITU to serve as  a depository of information on the
experiences of Member States .
Contributions from ITU-T Study Group dealing with related issues is required.S/C/W/110/Add.4
Page 32
6 Sources of Input Required for Carrying Out the Study
The major source of input will be the experiences of those countries that have introduced
competition and addressed the question of interconnection. Contributions from Member States and Sector
Members will be essential to the successful study of this issue. Interviews, existing reports and surveys
should also be used to gather data and information for distillation into a comprehensive set of best practiceguidelines for administering interconnection. Material s from regional telecommunication organizations and
working groups should also be utilized to avoid duplicat ion of work. Close cooperation with ITU-T and other
activities within ITU-D is required and highly important.
7 Target Audience for the Output
a) Indicate expected types of target audience, by  noting all relevant points on the matrix which
follows
Developed Countries Developing Countries LDC's
Telecom Policy Makers Interested Highly interested because o f
lack of experienceHighly interested
because of lack o f
experience
Telecom Regulators Interested and experienced
with different modelsHighly interested and some
countries have immediate
need for informationHigh interest but may
need specific models
Service Providers(Operators) New entrants, regardless o f
size, extremely interested.
Major suppliers cautious
and usually beneficiary o f
status quoNew entrants, regardless o f
size, extremely interested.
Major suppliers cautious
and usually beneficiary o f
status quoNew entrants, regardless
of size, extremely
interested. Major
suppliers cautious and
usually beneficiary o f
status quo
Manufacturers High interest as will
promote development o f
infrastructureHigh interest as will
promote development o f
infrastructureHigh interest as will
promote development o f
infrastructure
b) Target Audience - Who specifically will use the output
Based on the foregoing evaluation matrix, a broad range of telecom policy makers, regulators, and
service providers from LDC's and developing countries wi ll all be highly interested in the results of this
Question. Policy makers and regulators from developed countries may be interested in the compendium.
Manufacturers will also have a high interest in the Question since appropriate interconnection measures will
promote development of infrastructure.
c) Proposed methods for implementing the results
The study should be carried out  and distributed in the traditional manner at the ITU-D Study Group
meetings. However, given the importance of this issue, the BDT could also conduct regional seminars and
meetings, perhaps in conjunction with regional teleco mmunication organizations and together with the VAP
Programme 1, to disseminate the results of the Question. The results could be published by the ITU for widerdistribution.
The participants in the study will learn the experiences of the various practical examples and will be
able to study their own cases.S/C/W/110/Add.4
Page 33
8 Proposed method for handling this Question
Because the issue of interconnection is of such great importance to many countries, the lead study of
this Question should be within a study group over a multi-year study period with interim results. The
Questionnaire should be sent to the ITU-D Members seeking information on their existing experience. This
Questionnaire could be incorporated in the ITU Annual Regulatory Survey.
The interaction and participation by experts from around the world in this issue will result in a useful
product for developing countries. However, some items might be entrusted to focus groups to achieve
interim results within an appropriate time-frame.
9 Coordination Requirements of the Study
Because the issue of interconnection is related to other issues being studied by the ITU, coordination
will be required within the ITU-D Study Groups and programmes  (Valletta Action Plan Programme 1) as
well as with the Study Groups from other ITU sectors. In particular, work carried out by ITU-T Study
Groups working in the field of numbering plan (Study Groups 2 and 11) and tariff issues (Study Group 3) is
to be taken into consideration.
Close coordination will also be required between the BDT and those responsible for this Question.
Regional organizations such as CITEL and APEC are also currently considering issues regarding
interconnection. Thus coordination with those organizations should be undertaken to reduce duplication of
efforts.
Q. 7/1 Universal Access/Service
1 Statement of Problem
One of the greatest challenges for all countries is ensuring that an ever larger proportion of their
population has access to affordable telecommunications, which is often called universal access/service.
Whether the specific goal is to provide telecommunication access to a particular portion of the population, toachieve certain levels of telecommunication penetration, or to ensure that specific services are provided to a
particular group, all telecommunication policy makers must address the universal access/service needs of
their countries. For further information see the annex.
2 Question or Issue Proposed for Study
The Study Group should establish a set of best practice guidelines for developing countries to take
into consideration when developing policies, legislation, and/or regulations to address the critically important
issues involving universal access/service. To efficiently and effectively study the issue of universal
access/service, the Study Group should build on the work already done by ITU and in particular work
already done for Questions 2/1, 3/1, 4/2, and 6/2 for the 1994-1998 study period of the ITU-D and other
available materials, e.g., the 1998 World Telecommunication Development Report. To establish the best
practice guidelines, the Study Group shall:
1) Identify the goals, impacts and expected benefits of existing different universal access/service
policies, explaining the rationale for making these determinations.
2) Describe the use and the regulatory implications of new technologies and services in order to
maximize the benefits that these technologies can provide for the expansion and improvement of
telecommunication services.S/C/W/110/Add.4
Page 34
3) Identify the most common, as well as the most innovative, approaches to achieving universal
access/service goals when the private sector is responsible for implementing the telecommunicationdevelopment initiatives, describing the advantages and disadvantages of each approach.
4) Identify guiding principles for raising, alloca ting, and administering universal access/service
programmes, such as transparency, equitable distribution and access, competitively and
technologically neutral allocation, and targeted to users.
5) Describe the legislative and regulatory frameworks that would be needed to implement universal
access/service programmes or initiatives.
6) Identify and analyse the relationship that universal access/service policies have on other key
telecommunication issues that arise as countries transition to increased competition, such as access
charges, interconnection frameworks and agreem ents, accounting rates, and tariff rebalancing.
3 Description of Expected Output
The output produced during the study of this question should be divided into two stages. The first
stage would be mainly descriptive and would provide a review of currently existing universal access/service
mechanisms described in tasks 1-4 above. This information would be suitable for providing the necessary
background and information on alternatives for universal access/service mechanisms for government
officials and telecommunication service providers. This part of the output would focus on casting aframework that could be used to develop detailed procedures to implement a universal access/service
programme. The information contained in the first stage of the output could serve as a stimulus for
legislative sectors of government to address the issues associated with providing universal access/service.
The second stage would focus on practical information that would be directly applicable to
regulators, administrators, and telecommunication service personnel at the working level in order to
implement and operate universal access/service programmes. The information obtained during the first stage
of the output would be used during the second stage to establish best practice guidelines and
recommendations for regulators, administrators, and telecommunication service providers for implementing
universal access/service programmes.
4 Required Timing of Expected Output
Because the information gathered for the study question will be useful for countries introducing or
reassessing their universal access/service programmes, it should be disseminated as early as possible and
without waiting for a final work product of the question. By the end of the first third of the study period, thefirst stage of the output should be produced. The second stage should be released as soon as practicable after
the first stage but not later than the last meeting of the Study Group during the 1998-2002 study period.
5 Proposers/Sponsors of the Question
This Question is a direct result of the study of Questions 2/1 and 4/2 during the study period 1994-
1998. There was consensus that the issue of universal access/service is of tremendous importance to many
countries, particularly developing countries, and that study should continue on those particular aspects ofQuestions 2/1 and 4/2, as well as other related Questions such as 3/1 and 6/2. The Rapporteurs for Question
2/1 and 4/2 proposed the specific question, in additio n many Member States and Sector Members have also
expressed great support for the continued study of this issue.
6 Sources of Input Required for Carrying Out the Study
An important source of input will be the experiences of those countries that have made the greatest
gains in establishing universal access/service concepts, including the use of new technologies, programmes
and funds. In addition contributions from Members and Sector Members will be essential to the successful
study of this issue. Interviews, existing reports, ITU materials including previous work of Study Group
questions, Colloquia, and surveys should also be used to gather data and information for distillation into aS/C/W/110/Add.4
Page 35
comprehensive set of best practice guidelines for administering universal access/service programmes.
Materials from regional telecommunication organizations should also be utilized to avoid duplication of
work.
7 Target Audience for the Output
a) Indicate expected types of target audience, by  noting all relevant points on the matrix which
follows
Developed Countries Developing Countries LDC's
Telecom Policy Makers Interested Highly interested because o f
unmet needsHighly interested
because of critical andunmet needs
Telecom Regulators Interested and experienced
with different models Highly interested and some
countries have implemented
innovative approachesHigh interest but often
no legal framework to
implement policies
Service Providers(Operators)Small operators interested
Large operators cautious
and usually beneficiary o
f
status quoPrivate sector, particularly
new technologies, highly
interested but governmentmonopolies less soGovernment monopolies
relatively unsuccessful
Manufacturers Moderate interest Moderate interest Significant Interest
b) Target Audience - Who specifically will use the output
Based on the foregoing evaluation matrix, a broad range of telecom policy makers, regulators, and
service providers from LDC's and developing countries wi ll all be highly interested in the results of this
question. Policy makers and regulators from developed countries may be interested in the compendium of
approaches. Manufacturers will be interested in potential equipment and system sales, as well as intechnology transfer opportunities, involving the manufacture of equipment and systems in developing
countries under mutually beneficial partnership and joint venture arrangements.
c) Proposed methods for implementing the results
The results should be distributed in the traditional manner at the ITU-D Study Group meetings.
However, given the importance of this issue, the BDT could also conduct regional seminars and meetings,
perhaps in conjunction with regional telecommunicati on organizations, to disseminate the results of the
question. The results could be published by the ITU for wider distribution.
8 Proposed method for handling this Question
a & b) How and Why
Because the issue of universal access/service is of such great importance to all countries, the study of
this question should be within a Study Group over a multi-year study period with interim results as indicated
above.
9 Coordination Requirements of the Study
Because the issue of universal access/service is closely related to other issues being studied by the
ITU, a great amount of coordination will be required  within the ITU-D Study Gr oups as well as the Study
Groups from other ITU sectors. Close coordination wi ll also be required between the BDT and those
responsible for this question. Regional organizations such as CITEL and APEC are also currentlyS/C/W/110/Add.4
Page 36
considering issues regarding universal access/service. Thus, coordination with those organizations should be
undertaken to reduce duplication of efforts.
Q. 8/1 Establishment of an independent Regulatory Body
1 Statement of Problem
Reform in the telecommunication sector is occurring at an unprecedented rate. Technological
developments have created new opportunities for communication and the globalization of the
telecommunications market. Consistent with these developments, many countries have begun to examine the
structure of their telecommunication sector. In the past five years, many countries have limited the role of
monopoly service providers and have begun to introduce liberalization, privatization, and competition in the
industry. Many other countries are preparing to engage in such reform in the near future. In a liberalized
industry structure, the role of the regulatory body assumes a crucial position to ensure that new entrants cancompete fairly with major suppliers.
As part of this process, a central issue is the separation of different functions, namely the operational
and regulatory function as well as the ownership and policymaking function. Adopting these distinctions
allows the government to demonstrate that its telecommunication sector is regulated in a fair and opendecision-making manner.
Regulatory reform and the resulting institutions wi ll reflect the broader environment of the country,
and its historical legal, social, political, and economic foundations. The unique national circumstances will
influence the method of, and results of, reform in each country. These factors include: the overall level ofeconomic development; the state of development of the national network; the historical framework of the
institutions; constitutional provisions; the legal system; the national tradition of public administration; and
the roles and diversity of interest groups.
2 Question or Issue Proposed for Study
The Study Group should identify guidelines for countries to take into consideration when developing
an independent regulatory body. To efficiently and effectively study the issue of regulatory reform, the Study
Group should build on the work already done for Question 2/1 for the 1994-1998 study period and other
available materials. To accomplish this, the Study Group shall:
1) Identify methods and criteria that may be used to develop a governmental telecommunication policy
and to assess the extent of legislative and regulatory reform necessary to implement a national
telecommunication policy.
2) Continue identifying regulatory models for a telecommunication regulatory body, describing the
legal, economic, and social factors that may lead to the adoption of one regulatory approach overanother.
3) Describe the range of administrative activities that a regulatory body may engage in, such as
rulemaking and enforcement, licensing and concessioning, and management of scarce resources.
4) Describe key regulatory issues that a regulatory body may address, such as the provision of service,
interconnection, universal access/service, tariffing, quality of service, standardization/type approval,
numbering, and competitive safeguards (this may include frequency allocation and assignment as
well as broadcasting, however some countries create different bodies for the later issues).
5) Identify criteria that may be used to determine the size of the regulatory body, including staff and
appointed members of the decision-making body, taking into account the size of the industry, the
scope of the regulator's mandate, the degree of initiative the regulator will undertake, and the level
of resources necessary for implementation.
6) Identify sources of funding for resources, including independent funding mechanisms, as well as a
multi-step implementation approach that considers resource limitations and the need to develop
regulatory credibility at the outset.S/C/W/110/Add.4
Page 37
3 Description of Expected Output
The output produced during the study of this Question should be a set of best practice guidelines for
countries in transition to more liberalized telecommunications market to establish its independent regulator.
4 Required Timing of Expected Output
Because the information gathered for this Question will be very useful for countries reassessing their
regulatory approach or introducing an independent regulator, it should be disseminated as early as possible,
preferably by the second Study Group meeting. During the study period, the results should be disseminated
widely and early so that countries that are or soon will be establishing independent regulators can reference
these materials when creating a regulator.
5 Proposers/Sponsors of the Question
This Question is a result of the study of Question 2/1 during the study period 1994-1998. There was
a consensus that the issue of regulatory reform is of tremendous importance to all countries, particularly
developing countries, and that a study should continue on that particular aspect of Question 2/1 - the
establishment of an independent regulatory body.
6 Sources of Input Required for Carrying Out the Study
An important source of input will be the experiences of those countries that have made the greatest
gains in establishing an independent regulatory body. Contributions from Member States and Sector
Members will be essential to the successful study of this Question. Interviews, existing reports, ITU
materials including previous work of Study Group Questions, Colloquia, and surveys should also be used to
gather data and information for distillation into a comprehensive examination of this question. Materials
from regional telecommunication organizations should also be utilized to avoid duplication of work.
7 Target Audience for the Output
a) Indicate expected types of target audience, by  noting all relevant points on the matrix which
follows
Developed Countries Developing Countries LDC's
Telecom Policy Makers Interested Highly interested Highly interested
Telecom Regulators Interested and experienced
with different modelsHighly interested and some
countries have implementedinnovative approachesHighly interested
Service Providers
(Operators)Small operators interested
Large operators cautious
and usually beneficiary o f
status quoPrivate sector, particularly
new technologies, highly
interested but governmentmonopolies less soGovernment
monopolies cautious
and usually
beneficiary of status
quo
Manufacturers Moderate interest Moderate interest Moderate interest
b) Target Audience - Who specifically will use the output
Based on the foregoing evaluation matrix, a broad range of telecom policy makers, regulators, and
service providers from LDC's and developing countries wi ll all be highly interested in the results of this
question. Policy makers and regulators from developed countries may be interested in the compendium ofS/C/W/110/Add.4
Page 38
approaches. Manufacturers will also have some interest in regulatory reform, for example, with regard to the
extent that standardization/type approval is considered.
c) Proposed methods for implementing the results
The results should be distributed in the traditional manner at the ITU-D Study Group meetings.
However, given the importance of this issue, the BDT could also conduct regional seminars and meetings,
perhaps in conjunction with regional telecommunicati on organizations, to disseminate the results of the
question. The results should be published by the ITU for wider distribution.
8 Proposed method for handling this Question
a & b) How and Why
Because regulatory reform is of such great importa nce to all countries, the study of this question
should be within a Study Group over a multi-year study period with interim results as indicated above.
Obtaining the widest possible participation will enhance the study of this question and because the Study
Group brings together a diverse group of Member States and Sector Members in a unique setting, it is thebest forum to address this issue. The interaction and participation by experts from around the world in this
issue will encourage active debate and new ideas from the meetings.
9 Coordination Requirements of the Study
Because regulatory reform is closely related to other Questions being studied by the ITU, a great
amount of coordination will be required within the ITU-D Study Groups, programmes as well as the Study
Groups from other ITU sectors. Close coordination wi ll also be required between the BDT and those
responsible for this question.S/C/W/110/Add.4
Page 39
ATTACHMENT III
INT
INTERNATIONAL TELECOMMUNICATION UNION
TELECOMMUNICATION REGULATORY
SURVEY 1999
Contact:  B. Bodgan-Martin, Tel.:  41 22 730 56 43, Fax:  41 22 730 64 49, Email:  doreen.bodgan@itu.int
Country:_______________________ Date of completion:_________________
Person(s) who completed the survey :
Name:___________________________________
Position._________________________________Organization:_____________________________
Address:_________________________________
City:____________________________________
Tel:_____________________________________
Fax:_____________________________________Email:___________________________________Name:___________________________________
Position._________________________________Organization:_____________________________
Address:_________________________________
City:____________________________________
Tel:_____________________________________
Fax:_____________________________________Email:___________________________________
Name:___________________________________
Position._________________________________
Organization:_____________________________Address:_________________________________
City:____________________________________
Tel:_____________________________________
Fax:_____________________________________
Email:___________________________________Name:___________________________________
Position._________________________________
Organization:_____________________________Address:_________________________________
City:____________________________________
Tel:_____________________________________
Fax:_____________________________________
Email:___________________________________
Note: all information provided throughout this survey  should describe the situation as of  1 January
1999.  Future policy initiatives should be listed in Section VIII.S/C/W/110/Add.4
Page 40
Please indicate any changes:
Policy Maker: ____________________________
Address:_________________________________
City:____________________________________
Tel:_____________________________________Fax:_____________________________________
Email:___________________________________
Web site:_________________________________Regulator:___ ____________________________
Address:_________________________________
City:____________________________________
Tel:_____________________________________Fax:_____________________________________
Email:___________________________________
Web site:_________________________________
If there is more than one policy-maker and/or regulator, please indicate name and address below:
Policy Maker: ____________________________
Address:_________________________________
City:____________________________________
Tel:_____________________________________
Fax:_____________________________________Email:___________________________________
Web site:_________________________________Regulator:___ ____________________________
Address:_________________________________
City:____________________________________
Tel:_____________________________________
Fax:_____________________________________Email:___________________________________
Web site:_________________________________
SECTION I - LEGISLATIVE FRAMEWORK
1)  What laws, decrees, legal instruments, or regulations govern the telecommunication sector in your
country?(This section should also include legislation which governs the information, communication and
broadcasting sectors.)
Law/Regulation Year
AdoptedDescription/Remarks
(e.g. review procedure)Web site
Http:S/C/W/110/Add.4
Page 41
2)  Are there any legislative provisions to facilitate the employment of women in the telecommunication
field? □ Yes□ No
If Yes, explain___________________________________________________________________
SECTION II - THE REGULATORY INSTITUTION
THE REGULATOR
3)  Have regulatory and operational functions been separated? □ Yes, year? _______    □ No
4)  Does a separate* Telecommunication Regulatory Authority exist?
□ Yes   □ No
If No,
Name entity responsible for regulation then proceed to question 5.
_________________________________________________
If Yes,
4.a) Year created_____________________
4.b) Is the Regulatory Authority independent from the incumbent operator? □ Yes□ No
4.c) Is the Regulatory Authority independent from political power (Ministry)? □ Yes□ No
4.d) To whom does the Regulatory Authority report? (more than one selection possible)
□ The Sector Ministry
□ The Head of State
□ The Legislative Branch
□ No one
□ Other________________________
4.e) How is the Regulatory Authority financed? (more than one selection possible)
□ License fees
□ Government appropriation
□ Numbering fees
□ Spectrum fees
□ Other_____________________________________
4.f) Is the Telecommunication Regulatory Authority a collegial body (i.e. are there
Members/Commissioners)? □ Yes□ No
If Yes,
Indicate total number of members________(Number of female members ________)
The Members are employed:  □ full time □ part time
If No,
Identify the position of the head of the Regulatory Authority (i.e. Director General,
Chairman, Administrator, etc.)_________________________________________
4.g) Who appoints the Members/Head?___________________________________
4.h) What is the normal period of appointment for Members/Head of the Regulatory Authority
(years)?_____________4.i) Are Members/Head allowed to have any other professional or electoral position?
□ Yes   □ NoS/C/W/110/Add.4
Page 42
4.j) Total number of staff in the Regulatory Authority___________
_______% of staff which are women
* Note:  Separate : “independent” in terms of finance and decision-making.
4.k) Have any policies or practices been put in place to ensure that recruitment, employment,
training and advancement of men and women in the Regulatory Authority are undertaken on a fairand equitable basis?
□ Yes□ No
If Yes, please give examples
____________________________________________________________________
____________________________________________________________________
4.l) Please attach an organizational chart of the Regulatory Authority and give a brief description of
tasks  (if possible in electronic format, e.g Word for Windows document).
5)  If no Telecommunication Regulatory Authority exists, are there plans to create one?
□ Yes, year?_____________ □ No
REGULATION
6)  Regulatory functions:
Please mark (X) below which entities have responsibility for the functions listed.
Functions Sector
MinistryOther Ministry
or
Government
body (name)Regulatory
Authority*Operator Not
regulatedOther
(Please specify)
Numbering plans
Tariff proposal
Tariff approval
Technical
standards
Establishment of
Interconnection
rates
Arbitration of
disputes
Frequency
allocation
Type approval
Monitor service
quality
Establishment of
license fees
*Note :If you answered “no” to question 4, leave column for Regulatory Authority blank.S/C/W/110/Add.4
Page 43
7)  What data and documents have to be filed by each operator with the Regulatory Authority or government
entity on a regular basis? Please check all those that apply and indicate frequency (in months ).
□ Accounting rates, frequency _________________, date last submitted (month/year)___________
□ Interconnection rates, frequency _____________, date last submitted (month/year)____________
Indicate most recent decisions________________________________________________
□ Financial Reports and Accounts, frequency ________, date last submitted (month/year)________
□ Tariff tables, frequency ______________________, date last submitted (month/year) _________
Indicate most recent decisions________________________________________________
□ Service performance indicators (e.g., quality of service), frequency ________________, date last
submitted (month/year)_____________
□ Business/investment plans, frequency ____________, date last submitted (month/year)_________
□ Cost manuals, frequency ____________________, date last submitted (month/year)___________
SECTION III - REGULATORY ISSUES AND PROCESS
TRANSPARENCY AND PUBLIC HEARINGS
8)  Who brings issues before the Regulatory Authority? (check as many as apply)
□ Telecommunication service provider(s)
□ The general public
□ The regulator
□ Other, specify_______________________________________________________________
9)  How are potentially interested parties made aware of issues before the Regulatory Authority? (check as
many as apply)
□ Public notices published and distributed by the regulator
□ Notices placed in the offices of the telecommunication operator
□ Newspaper or other media advertisements
□ Other, specify_______________________________________________________________
10)  To what degree are regulatory processes open and transparent? (check as many as apply)
□ Any interested party (company or individual) may make representations
□ Filings (license applications, complaints, tariff notices, etc.) before the regulator are made for
public inspection
□ Public hearings are held
□ Regulatory decisions are communicated  to the public
INTERCONNECTION
11)  Has your country established a specific interconnection regime? □ Yes□ NoS/C/W/110/Add.4
Page 44
12)  Where has the regulatory framework for interconnection been set forth? (Please attach copies of any
such document(s))
□ legislation
□ licenses
□ regulatory statements
□ directives
□ other_______________________________________________
INTERCONNECTION REGIME GENERALLY
13)  Does the regulatory framework for interconnection apply to:
□ fixed local interconnection,
□ fixed long distance interconnection,
□ fixed international service interconnection
□ mobile service interconnection
□ other, please explain any variations ______________________________________________
14)  Has your country established specific criteria which fixed telecommunication operators must meet in
order to receive authorization? □ Yes□ No
  If Yes,
14.a) Are these criteria publicly available? □ Yes□ No
If Yes,
Please describe__________________________________________________
14.b) Are the criteria different for international operators?  □ Yes□ No
EXTENT OF INTERCONNECTION OBLIGATION
15)  Does the regulatory framework impose an oblig ation on existing network operators to provide
interconnection to competing carriers? □ Yes□ No
15.a) If Yes,
on whom is the obligation imposed?
□ the incumbent fixed network operator
□ all fixed network operators
□ all other networks
□ all service providers, please explain_________________________________________
15.a.i) How is the obligation enforceable?
□ by the regulator
□ by interested/affected parties
□ through the judicial system
□  through other means____________________________________________S/C/W/110/Add.4
Page 45
15.a.ii) What are the sanctions for failure to provide interconnection or to offer reasonable
interconnection terms?
□ license revocation
□ monetary penalties
□ other__________________________________________________________
16)  Who has the right to interconnect?
□ all domestic facilities-based carriers
□ all service providers
□ all content providers
□ others______________________________________________________________________
16.a) Are there different classes of fixed operator's licenses? □ Yes□ No
If Yes,
Please describe___________________________________________________
16.b) Are all such carriers afforded the same rights to interconnect? □ Yes□ No
17)  Does the regulatory framework address the specific rates, terms and conditions for interconnection?
□ Yes□ No
17.a) Are they required to be reasonable and nondiscriminatory? □ Yes□ No
18)  Are interconnection agreements made public? □ Yes□ No
19)  Is unbundled access to network services required? □ Yes□ No
If Yes,
19.a) to what network services?
□ local loop (local access)
□ local and tandem switching capability
□ operator services
□ trunk lines/transmission
20)  Does the interconnection regime require that operators offer telecommunication services at wholesale
prices for resale by new entrants?  □ Yes□ No
If Yes,
20.a) What services are required to be made available?
Specify_____________________________________________________________
20.b) Please describe how pricing methodology diff ers from that which applies to interconnection or
leasing of unbundled network elements.
______________________________________________________________________________________________________________________________________
21)  If the interconnection terms and conditions are set through commercial agreements between the parties,
does the regulatory framework prescribe any dispute resolution mechanisms?
□ Yes□ No
21.a) Does the regulatory framework contain a timetable for negotiations?
□ Yes□ NoS/C/W/110/Add.4
Page 46
21.b) Does the regulatory framework set up a clear dispute resolution mechanism(s) if the parties
cannot agree? □ Yes□ No
□ arbitration
□ mediation
□ regulator-prescribed charges
21.c) In case of a dispute, is there a default interconnection charge and/or specific obligations that
create an incentive for the incumbent car rier to negotiate with the entrant?
□ Yes□ No
21.d) Have operators successfully negotiated interconnection agreements without recourse to the
dispute resolution mechanism? □ Yes□ No
TECHNICAL ASPECTS OF INTERCONNECTION
22)  Does the regulatory framework prescribe technical requirements of interconnection? □ Yes□ No
□ number and location of points of interconnection
□ network management across the points of interconnection
□ other requirements, please specify_________________________________________________
22.a) Is the technical quality of access equivalent?  □ Yes□ No
23)  Are incumbent carriers required to collocate the equipment of competitors in their central offices?
□ Yes□ No
23.a) What procedures are available if there is insufficient space for the competitors' equipment?
___________________________________________________________________________23.b) How are issues of multiple competitors
handled?____________________________________________________________________
24)  How are these requirements enforced?
______________________________________________________________________________
25)  How are issues such as incompatibility of equipment and need for capacity increases handled?
_______________________________________________________________________________
25.a) Who pays any costs associated with resolving these issues?
_______________________________________________________________________________
ACCESS DEFICITS
26)  Is there an access deficit (the amount by which the total cost of providing local exchange service
exceeds subscriber revenues) in your country’s economy?□ Yes□ No
27)  What size is the access deficit and how is it funded?
______________________________________________________________________________
28)  Are access deficit payments factored into interconnection charges? □ Yes□ No
If Yes,
Please explain____________________________________________________________S/C/W/110/Add.4
Page 47
29)  Has any attempt been made or planned to reduce the access deficit by rebalancing rates?
□ Yes□ No
If Yes,
Please describe your country's experience________________________________________
30)  If access deficits are funded through above-cost long distance and/or international calling charges, is
there any mechanism to require competitive carriers prov iding long distance or international service to share
the cost of providing local exchange service?  □ Yes□ No
If Yes,
30.a) how is the share determined?______________________________________________
INTERCONNECTION CHARGE AGREEMENTS
31)  How are interconnection charges set?
□ they are prescribed in the framework set by the regulator
□ they are set through commercial agreements between the parties
32)  If the regulatory framework does not prescribe actu al charges, does it set any pricing principles to be
applied in interconnection negotiations?  □ Yes□ No
If Yes,
what are they?______________________________________________________________
33)  Is regulatory approval of interconnection charges required?  □ Yes□ No
If Yes,
33.a) on what basis would they fail to gain approval?________________________________
33.b) Have any interconnection charges ever failed to gain approval? □ Yes□ No
34)  Is information about specific interconnection charge agreements made public?
□ Yes□ No
35)  Does the regulatory framework prescribe the cost basis for determining interconnection charges?
□ Yes□ No
If Yes,
35.a) does the regulatory framework prescribe an  historic or a forward-looking cost model ( i.e.,
fully-allocated or long-run incremental models)? ¨ □ Yes□ No
35.b) What kind of cost accounting system is used?______________________________
36)  Is the cost model used the same as when competition was first introduced?  ¨ Yes ¨ No
If No,
36.a) what was the initial cost model?____________________________________________36.b) why was it changed?_____________________________________________________S/C/W/110/Add.4
Page 48
LICENSING
37)  Please indicate below which services are subject to licensing.  For those services subject to licensing,
please mark (X) which entity is responsible for licensing that service, indicate whether there is a license fee,
and specify the license duration.
Service
subject to
licensingEntity(ies) responsible for licensing * License
fee?License
duration
(in years)
Yes No M TRA PTO O (please specify) Yes No
Localservices
Domestic
long
distance
Internationallong
distance
Data
Telex
Leased lines
Mobile(cellular)
Paging
Cable
Television
Fixedsatellite(FSS)
Mobilesatellite
(MSS)
GMPCS
(FSS/MSS)
InternetServiceproviders
* Note:  M= Ministry,  TRA= Telecommunication Regulatory Authority, PTO= Operator, O=
other
38)  Briefly outline the procedures used by your country to license telecommunications operators.
(i.e. information required of applicants, normal time period for application processing).
______________________________________________________________________________________________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________S/C/W/110/Add.4
Page 49
39)  How are license fees established or calculated?
According to:
□ % of annual revenue (turnover)
□ Regulation (regulatory decision)
□ Frequency bandwidth
□ Services
□ % of investment
□ Cost recovery
□ Distance
□ Number of subscribers or stations or terminal equipment
□ Other_____________________________________________
END USER PRICE CONTROLS
40)  Are end user prices regulated? □ Yes□ No
If Yes, how?
□ Price cap
□ Rate of return
□ Other, specify___________________________________________________
REBALANCING
41)  Has rebalancing been implemented? □ Yes□ No
If Yes, to what degree?
□ Completed
□ Almost completed
□ Just started
□ Not started yet
CALLBACK SERVICES
42)  Are callback services allowed in your country?
□ Yes□ No
If Yes,
Please name the main service providers__________________________________________
If No,
Which law prohibits the provision of these services ?____________________________
RESALE
43)  Is third party resale of leased line capacity permitted?
Domestic: □ Yes □ No
International: □ Yes □ NoS/C/W/110/Add.4
Page 50
NUMBERING PLAN
44)  How do customers access different carriers?
□ carrier-selection prefixes
□ carrier pre-selection (equal access)
□ other, please describe__________________________________________________________
45)  Do customers need to dial more access codes to access new entrants than they do to access
the incumbent carrier?  □ Yes□ No
If Yes,
Please explain the rationale for any difference__________________________________
46)  Does the regulatory framework mandate number portability (the ability of customers to retain their
telephone numbers when switching carriers)?  □ Yes□ No
If Yes,
Please describe the number portability arrangement.
________________________________________________________________________
47)  How are the costs of number portability apportioned between carriers?
___________________________________________________________________________
SPECTRUM MANAGEMENT
48)  What is the criteria for allocating spectrum?
□ Auction
□ Bidding
□ “First come, first serve”
□ Other, specify_____________________________________
QUALITY OF SERVICE
49)  Is quality of service regulated or monitored? □ Yes□ No
If Yes, Please attach document that specifies criteria being used.
CONSUMER PROTECTION
50)  Are there specific institutions responsible for telecommunication consumer protection?
□ Ombudsman
□ Telecommunication Consumers Association
□ Other, specify___________________________________________________________
SECTION IV - SECTOR STRUCTURE
STATUS OF THE INCUMBENT OPERATOR
51)  Have the postal and telecommunication operations been separated?
□ Yes, year?________ □  NoS/C/W/110/Add.4
Page 51
52)  Are all telecom services (local, trunk, international, cellular, others) provided by the same operator?
□ Yes□ No
53)  Is the incumbent (main) operator state-owned?
□ Yes□ No
If No, please proceed to question 54.
If Yes,
53.a) Is the incumbent corporatized? □ Yes, year?_________  □ No
53.b) Does the Government intend to privatize the incumbent? (check  one)
□  In the process of privatizing, _______%
□  No intention to privatize at present
□  Yes, precise forecast year _____________
Please proceed to question 56.
54)  Indicate degree of private ownership of the incumbent:
□ Minority ownership, less than 50%   (______%)
□ Majority ownership, more than 50% (______%)
□ 100%
55)  Please complete the following: (if privatization occurred in several phases, provide information for each
phase separately in annex A, p.22 )
55.a) Date of privatization (month/year)_________________
55.b) Total shares sold _______%55.c) Mode used:
□ Public offering, total _____% (International ______%, domestic _______%),
amount raised (currency) _____________________
□ Sale to a strategic equity partner or consortium, ____%, amount raised (currency)____________
name of partner____________________________________________________________
□ Sale to employees, _____%, amount raised (currency)____________________________
□ Other, _____%, amount raised (currency)___________________, specify__________________
56)  Indicate name and status of other operators (ownership and service provided)
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
PRIVATE SECTOR PARTICIPATION
57)  Is the private sector permitted to participate in providing public switched telephone services ( local, long
distance, international, cellular, others)? □ Yes □ No
58)  Have any of the following forms of operating been used?
(If Yes,  Please give examples)
(I) Build-Operate -Transfer (BOT) □ Yes, _________________________________ □ No
(ii) Build-Transfer-Operate (BTO) □ Yes, _________________________________ □ NoS/C/W/110/Add.4
Page 52
(iii) Concession □ Yes, ________________________________ □ No
59)  What is the maximum foreign participation or ownership permitted for any telecommunication entity?
_________ %, remarks____________________________________________________________
LEVEL OF COMPETITION
60) Please complete the following table by marking (X) the relevant level of competition.
Service Monopoly Duopoly Full competition
     (indicate
number of licensees)
Local services
Domestic long distance
International long distance
Data
Telex
Leased Lines
Mobile (cellular) analog
                           digital
GMPCS system operators
Paging
Cable Television
Fixed satellite services (FSS)
Mobile satellite services
(MSS)
GMPCS (FSS/MSS)
Internet service providers
Note:  Monopoly  =  service provided exclusively by one operator.
           Duopoly  = number of participants restricted to two.
           Full competition  = any company can be licensed to provide the service, no limits
on  number of licensees.
COMPETITIVE SAFEGUARDS*
61)  What type of safeguards are maintained to prevent operators from engaging in anti-competitivepractices?______________________________________________________________________________________________________________________________________________________________________
62)  In many ITU Countries, the incumbent operator offers more than one service, such as domestic fixed
and mobile.  What provisions does the interconnection fr amework contain for ensuring that the transfer price
(the "price" a multiple service operator charges itself for interconnection between the different services)
adequately reflects market conditions?
______________________________________________________________________________S/C/W/110/Add.4
Page 53
*Note: Competitive safeguards : (adapted from WTO/GBT Reference Paper)
Appropriate measures shall be maintained to prevent suppliers from engaging in anti-competitive practices.
The anti-competitive practices referred include in  particular: engaging in anti-competitive cross-
subsidization;
using information obtained from competitors with anti -competitive results; and not making available to other
services suppliers on a timely basis technical information about essential facilities and commercially relevant
information which are necessary for them to provide services.
63)  Where some services remain under exclusive rights, do such safeguards include requirements on
operators for:
□ Separate bookkeeping/accounting for competitive and reserved services
□ Structural separation of entities providing competitive and reserved services (e.g. the
establishment of separate subsidiaries for the provision of competitive services)
□ Other, specify________________________________________________________
64)  Where has the legal framework for anti-competitive safeguards been set forth?
□ Licenses
□ Telecom legislation
□ Competition legislation
□ Regulatory statements or directives
□ Other, specify________________________________________________________
65)  What government entities are responsible for oversight and enforcement of measures relating to anti-
competitive behavior?
□ Telecom Regulator
□ Competition authority
□ Telecom Ministry
□ Judiciary
□ Other, specify________________________________________________________
66)  What recourse can the Regulatory Authority take in the case of anti-competitive behavior?
□ Revoke license
□ Impose tariff or accounting controls
□ Impose fines
□ Other, specify________________________________________________________
67)  How may the responsible authorities initiate action concerning anti-competitive behavior?
□ Self-initiated investigation
□ Investigation in response to complaints filed by competitors
□ Other, specify________________________________________________________
68)  Has the regulator/court been required to act in enforcing any of the competitive safeguards?
□ Yes□ No
If Yes,
what was the result?________________________________________________________S/C/W/110/Add.4
Page 54
SECTION V - UNIVERSAL SERVICE
UNIVERSAL SERVICE
69)  Does your country have a definition of  “universal access to basic services” or “universal service”?
□ Yes□ No
69.a) If Yes,
Please specify which services are covered:
□ Fax
□ Telex
□ Internet
□ Email
□ GMPCS
□ Basic telephony
□ Data transmission
□ Public payphone
□ Accessibility of telephone service from any populated area of the country
□ Other__________________________________________________
70)  What policies have been implemented in order to ensure universal access to basic services?
□ Access charges
□ Direct subsidy from government
□ Cross subsidy between services
□ Universal service funds
□Other policies  (please specify)_____________________________________________________
71)  Does the incumbent operator have to meet specific universal service obligations? □ Yes□ No
71.a) Do other operators have to meet specific universal service obligations? □ Yes□ No
OTHER OBLIGATIONS
72)  What other obligations are imposed on:
The incumbent operator?
□ Interconnection
□ Service quality
□ Expansion & improvement
□ Special services for impaired or elderly
□ Other_______________________________
Other operators?
□ Interconnection
□ Service qualityS/C/W/110/Add.4
Page 55
□ Expansion & improvement
□ Obligations to serve unserved areas
□ Special services for impaired or elderly
□ Other_______________________________
72.a) How are they regulated?
Incumbent:
□ In license/concession contract
□ Contractual programme with the government
□ Other____________________________________________
Others:
□ In license/concession contract
□ Contractual programme with the government
□ Other____________________________________________
73)  Does your country have plans to implement or is currently implementing telecentres in rural and remote
areas that offer access to Information Communication Technologies (ICTs)? □ Yes□ No
SECTION VI - NEW TECHNOLOGIES AND SERVICES
NATIONAL INFORMATION INFRASTRUCTURE POLICY
74)  Has your country established a National Information Infrastructure (NII) policy*?
□ Yes□ No
If  Yes,
Please state the responsible agency and contact address:
Name:________________________________________________
Contact:_________________________________________________
Address:_________________________________________________
City:____________________________________________________
Tel:____________________________________________________Fax:____________________________________________________
Email:__________________________________________________
Web site:________________________________________________
75)  Have any policies or strategies been put in place to ensure fair and equitable access for both men and
women to NII?□ Yes□ No
If Yes,
Please explain_______________________________________________________________
* Note: see for example,
 - Information Infrastructure policies in the OECD countries at:
http://www.oecd.org/dsti/sti/it/infosoc/prod/e_96-174.htm
76)  Does your country have a timetable for development of NII? □ Yes□ No
If Yes,S/C/W/110/Add.4
Page 56
Please state the main National Information Infrastructure initiatives in the following table:
Year o f
AdoptionInitiative Brief Description  funding*
G   P   JV
* Please indicate how projects are to be funded by marking (X) the relevant column
G = Government, P = Private, JV= Joint Venture
77)  Is foreign participation in NII projects allowed? □ Yes, maximum _____% □ No
78)  Has an Inventory been undertaken to identify National Information Infrastructure Projects?
□ Yes □ No
If  Yes,
78.a) Is this information contained in the inventory publicly available?  □ Yes □ No
If Yes,
78.b) How is it made available?
□ On the Web, Web site:__________________________
□ Traditional publication
□ Other, specify_________________________________
78.c) Is this information being used to inform regulators and policymakers? □ Yes □ No
79)  Please describe the four most important applications* and any market research undertaken to gauge
consumer demand, any trials taking place and likely year of implementation.
Applications* Market Research
Undertaken
    Yes           NoTrials
(name, location, duration)Year of
Implementation
*Note : Types of applications include : Distan ce Education, Home Shopping, Electronic Commerce,
Telemedecine, etc.S/C/W/110/Add.4
Page 57
80)  Is your country participating in a Regional Information Infrastructure Initiative? □ Yes□ No
If Yes,
Please indicate which one(s):
□ G7 Global Inventory Project
□ African Information Society Initiative (AISI)
□ Asia-Pacific Information Infrastructure (APII)
□ American National Information Infrastructure initiative (NII)
□ European Community Information Society Initiative (ISI)
□ Regional Arab Information Technology Network (RAITNET)
□ Other, specify___________________________________________________
INTERNET
81)  What year was Internet avai lable in your country?______________________________
82)  How many Internet service providers (ISPs) are there? ________________________________
83)  Is the Telecommunications Regulatory Authority responsible for Internet regulation?  □ Yes□No
If No,
Name the responsible agency for Internet:
Name:________________________________________________
Contact:_________________________________________________
Address:_________________________________________________
City:____________________________________________________
Tel:____________________________________________________Fax:____________________________________________________
Email:__________________________________________________
Web site:____________________________________________________
84)  How many points of presence (local dial-up access to an Internet service provider’s network) are there
in your country? ______________
85)  Indicate number of Internet users in your country:_____________________ as of (date)_____________
86)  Indicate number of Internet subscribers (anyone paying a connecting fee to an ISP) in your country:
Dial up_________________________ as of (date)___________________
Leased lines ____________________ as of (date)___________________
87)  Indicate the size of the available international bandwidth__________________88)  Indicate number of leased lines used for Internet_______________________
89)  Are there any Internet services (e.g. IP fax, IP telephony, etc.) prohibited in your country?
□ Yes□ No
If Yes,
Please specify which ones ____________________________________________________
90)  Is Internet access provided uniformly at local call rates in your country?  □ Yes□ No
If  No, Please explain____________________________________________________________S/C/W/110/Add.4
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If Yes,
Please explain how this is implemented
_________________________________________________________________________
91)  Can Internet service providers construct or lease their own international gateway? □ Yes □ No
If No,
91.a) Are they required to go through the incumbent’s gateway? □ Yes □ No
GMPCS
92)  Does your country have a policy for Global M obile Personal Communications by Satellite (GPMCS)?
□ Yes□ No□ Under preparation
If Yes,
Please specify_________________________________________________________________________________________________________________________________________
93)  Name GMPCS system operators that are or will be providing these services
_________________________________________________________________________________
94)  Does your country have due diligence requirements for licensing GMPCS service (for example, does a
GMPCS system operator need to demonstrate that it has the financial or technical capabilities to provide anappropriate level of service, and does it have the appropriate contractual relationships in place to ensure
provision of that service)? 
□ Yes□ No
If Yes,
Please explain____________________________________________________________
95)  Does your country have any legal interception requirements in place with which a system operator or
service provider needs to comply before they can obtain a service authorization? ¨ Yes ¨ No
If Yes,
Please explain____________________________________________________________
CABLE TELEVISION
96)  Is there a law regulating cable television? □ Yes □ No
97)  Are telecommunication companies permitted to provide cable television service? □ Yes □ No
If Yes,
Please specify any restrictions:
_______________________________________________________________________
98)  Are cable companies permitted to provide telephony?  □ Yes □ No
If Yes,
Please specify any restrictions:
_______________________________________________________________________
SECTION VII - NATIONAL TELECOM NEEDS
99)  What are the most pressing problems in the telecommunication sector in your country?
(please rank the five most pressing problems, with 5 being the most important and 1 being the least
important).S/C/W/110/Add.4
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____  Lack of financing
____  Lack of equipment
____  Need for regulations dealing with: (mark (X) those that apply)
□ Interconnection
□ Tariffing
□ Licensing
□ Other______________________________________
____  Antiquated Network
____  Lack of business management skills
____  Cost of services
____  Long waiting list
____  Cost of infrastructure
____  Lack of trained personnel____  Other  _______________________________
SECTION VIII - FUTURE PLANS
100) What major reforms are planned or anticipated over the next two years?_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
DOCUMENTATION
The ITU/BDT is compiling national policy and regulatory documents (including national policy document,
national legislation, decrees, laws, latest tariff decision, interconnection agreement, national information
infrastructure policies, etc.) in an effort to establish a comprehensive regulatory library. We would greatlyappreciate any relevant documentation (hard copies or electronic) from your country.
Please list documentation provided.
Name Year Web site
We appreciate your participation in this survey.
Mrs. D. Bogdan-Martin
ITU/BDTTel: 41-22-730-5643 Fax: 41-22-730-6449
email: doreen.bogdan@itu.intS/C/W/110/Add.4
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ANNEX A: PRIVATIZATION TRANCHES (CONTINUED)
SECOND TRANCHE :
Date of privatization (month/year)_________________
Total shares sold _______%
Mode used:
□ Public offering, total _____% , (International _____%, domestic _____%),
amount raised (currency)________________________
□ Sale to a strategic equity partner or consortium, ____%, amount raised (currency)_____________
name of partner____________________________________________________________________
□ Sale to employees, ____%, amount raised (currency)_______________________
□ Other, _____%, amount raised (currency)__________________, specify____________________
THIRD TRANCHE :
Date of privatization (month/year)_________________
Total shares sold _______%
Mode used:
□ Public offering, total _____% , (International _____%, domestic _____%),
amount raised (currency)___________________________
□ Sale to a strategic equity partner or consortium, ____%, amount raised (currency)_____________
name of partner____________________________________________________________________
□ Sale to employees, ____%, amount raised (currency)_______________________
□ Other, _____%, amount raised (currency)________________, specify______________________
FOURTH TRANCHE :
Date of privatization (month/year)_________________
Total shares sold _______%Mode used:
□ Public offering, total _____% , (International _____%, domestic _____%),
amount raised (currency)___________________________
□ Sale to a strategic equity partner or consortium, ____%, amount raised (currency)_____________
name of partner____________________________________________________________________
□ Sale to employees, ____%, amount raised (currency)_______________________
□ Other, _____%, amount raised (currency)________________, specify______________________
FIFTH TRANCHE :
Date of privatization (month/year)_________________
Total shares sold _______%Mode used:
□ Public offering, total _____% , (International _____%, domestic _____%),
amount raised (currency)___________________________
□ Sale to a strategic equity partner or consortium, name ___________________________________
amount raised (currency)___________________________
□ Sale to employees, ____%, amount raised (currency)_______________________
□ Other, _____%, amount raised (currency)________________, specify______________________
__________