The assessment of international best practice in regulation of submarine cable access

Transcription

1 The assessment of international best practice in regulation of submarine cable access Monrovia, Liberia 7 9 December 2010 Katia Duhamel <katia.duhamel@twobirds.com> International Telecommunication Union

2 I. Introduction Outline II. International Benchmark 1. Comparison of the frameworks in the field of interconnection and access 2. Application to submarine cables access III. Main findings IV. Best practices 1. Singaporean regulation 2. Indian regulation 3. The combined action of the sector regulator and the competition authority to lower prices on international capacities: the SAFE example 4. Public infrastructures governance V. Conclusion 2

3 I. Introduction International rules of access and interconnection resulting from : WTO European Union USA 3

4 I. Introduction Common methodology - Common matrix between international and national/regional analysis Authorisations and licenses, Access interconnection and physical access etc. Little difference of approach in the field of price setting in Europe (ex post monitoring) Distinction made between the tariff and non-tariff obligations Comparison of the frameworks in the field of interconnection and access, in order to identify rules that ensure open access principle: authorisation and licences access and interconnection obligations non discrimination and transparency pricing obligation 4

5 II. International Benchmark General Outputs In the international context, the general rules for interconnection and access can form the basis of a regulatory intervention for submarine cables. However, these rules should be specified in order to adapt them to the specific situation of these cables and allow the emergence of a competitive offer for international capacity. It is essential to deal with the main bottleneck caused by landing stations but also to allow existing operators on land connected by submarine cable to access capacity held by other suppliers such as consortium members if the cable is owned by several operators. There are several possible methods for imposing the necessary rules for the creation of an environment that would facilitate open access to submarine cables: granting approvals and the modification of the reference offers of the operators using landing stations, the introduction of specific measures in their licence, and regulation with a general reach as demonstrated by the unbundling regulation of the European Commission. There are also 3 examples that provide a powerful vision of both regulatory framework and process: India, Mauritius and Singapore. In overseas territories of France, the French regulator ( ARCEP) was able to significantly lower prices but not regulate backhaul and co-location in the landing station. 5

6 II. International Benchmark Application to submarine cables access Lack of specific regulation related to submarine cables Rare example of regulation applied to all submarine cables India Example of implementation via the control of the RIO of the SMP operator Mauritius, Singapore Application of the competition law (ex post regulation) France 6

7 II. Main findings Submarine cables can be regulated by: Sectoral ex ante rules for interconnection and access. However they need to be clarify in order to adapt them to the specific situation of submarine cables Competition law (ex post) Need of a strong competition body Public infrastructures governance In these cases, the Government usually borrows the money to get the national fibre network built or put its existing network assets into an independent agency. Then it passes the network assets to another entity to manage. 7

8 II. Main findings 2 main ways for imposing the existing sectoral rules regulating access to submarine cables: Authorisation/Licenses RIO India and Singapore case offer two different but complete vision of how to deal with and how to regulate access to submarine cables 8

9 III. Best practices Singapore case application of sectoral interconnection and access rules Modification of SingTel s RIO (Singaporean incumbent); Infocomm Development Authority (IDA) modified the SinTel s RIO by inserting specific measures which give access to its cable landing stations and ensure backhaul connection 9

10 III. Best practices Singapore Access to landing stations SingTel is required to provide access and co-location at its CLS competing operators who own or leases capacities on long term basis, on any submarine cable landing at its CLS, Furthermore, those operators can access capacities owned or leased by third party in order to offer them backhaul and transit services. No obligation for SingTel to provide backhaul at regulated prices. 10

11 III. Best practices Indian case specific regulation related to every submarine cables 11

12 III. Best practices India: First, in 2005 TRAI (Telecom Regulatory Authority of India) fixed a ceiling tariff for IPLC (International Private Leased Circuits) Then, in 2007 TRAI issued a specific regulation related submarine cables International Telecommunication access to essential facilities at CLS Regulation 12

13 III. Best practices India : Every owner of CLS is mandated to: Provide access to third operator* requesting for accessing international capacity on any submarine cable system landing at its CLS Interconnect specified international submarine cable landing at its CLS Provide co-location including virtual and alternative co-location at its CLS Arrange backhaul circuit between cable landing station and the premises of the third operator Submit RIO for approval of the Authority within 30 days * - eligible Indian International Telecommunication Entity 13

14 III. Best practices The combined action of the sector regulator and the competition authority to lower prices on international capacities: the SAFE example In 2002, Reunion Island was linked to Metropolitan France by the Sat3/WASC/SAFE cable. France Telecom/Orange holds exclusive rights for the commercialization of SAFE capacities on Reunion Island (for 5 years). The incumbent owns and operates the only cable landing station on the island. Consequently : the price of leased lines provided to third party operators was initially extremely high: 16,000 /Mbit per month for a leased line. The development of Internet and all other services relying on affordable international bandwidth on Reunion are slow down In January 2004, France Telecom s competitors submitted a complaint to ARCEP. They established a price model showing that cost oriented prices for a leased line on SAFE should be around 1500 Euros/ month and per Mbit. In May 2004, ARCEP imposed a price of 1550 per month per Mbit on the company[1]. based on this model, whilst its own price model showed lower tariffs : 547 Euros/ month and per Mbit in 2004 for leased lines from Reunion Island to Portugal, and of 887 Euros stretched to Paris.. The ARCEP decision was based on the application of the qualification of the services of interconnection and access to services claimed by the competitors of France Telecom: Indefeasible Rights of Use (IRU) capacity on SAFE, backhaul connections from cable inlets, leased lines, ATM data transmission services and IP transit. Yet, taking into account the position of France Telecom on this segment and of the fact that these services are essential for alternative operators, the services provided must be cost oriented and the burden of proof falls on France Telecom to show this is the case. 14

15 III. Best practices The SAFE example (following) France Telecom refused to apply the ruling, maintained wholesale offers of a lower quality for third party operators, and developed anti-competitive practices on the retail market. In context, the Competition Council (later called the Competition Authority) was called upon to rule on the practices of France Telecom in the overseas department and, in 2009, it ruled that France Telecom had abuse of its dominant position based on these practices. During the inquiry, the Competition Council established that the other members of the SAFE consortium were authorised to supply international capacities to competing operators of France Telecom. Because of this competition, the current prices have now reached almost 100 Euros/month per Mbit.. The essential facilities doctrine is very important for the application of competition law. It is also likely to be important to justify more traditional telecommunications regulatory approaches. However, it is important to understand that, even for certain countries in Africa where the prospect of obtaining access to more than one undersea cable is unlikely, the test of being essential is not easily passed. Nonetheless, it may be a useful justification. [1] ARCEP Decisions and n of 4 March 2004 on litigation between Mobius and France Télécom and between Outremer Télécom and France Télécom respectively. 15

16 III. Best practices Public infrastructures governance In Western Europe, there are examples of public intervention in the expansion of national broadband coverage but not in the field of international submarine cables. In France particularly, Local Authorities have played a key role in the digital development of their regions, in partnership with operators, in granting public service delegation agreements (BOT contracts) to private operators in order to establish broadband backbones. However, the most useful examples are in Africa mainly related to terrestrial regional backbone and more recently in the field of submarine cable with for example : The special purpose vehicle (SPV) formed by the Government to own and operate the ACE landing station in Liberia The SALCAB Project Sierra Leone Both as a part of the West Africa Regional Communications Infrastructure Program (WARCIP) being prepared by World Bank for least connected countries. 16

17 V. Conclusions No one today denies the fact that access to broadband capacity bandwidth is necessary for the development of emerging countries. However, in Africa, where low-cost communications is needed most to accelerate socioeconomic development, this international bandwidth is the rarest and most expensive. This situation is mainly due to the high cost of international connections resulting from lack of international fibre optic infrastructure, resulting in a dependence on satellite bandwidth which has its own technical constraints and limitations and is more expensive. Over the last few years, the only major international optic infrastructure available in Africa has been SAT-3/WASC/SAFE connecting eight countries on the West coast of the continent to Europe and East Asia. Established and operated by a cartel of state monopoly telecommunication operators, prices have barely declined since the beginning of its entry into service in Today, many submarine cables projects connecting Africa could disrupt this model and cut prices provided that the implementation of a regulatory environment allowing Open Access and development of competition on international routes takes place in order : To increase the amount of international bandwidth capacity available to the country. To create a level playing field for access to international bandwidth that allowed a competitive market in the country. To secure significant drops in the cost of international communications for the country. Based on these objectives and on the previous international and regional practices WATRA members could define together a set of regulatory guidelines, useful to secure access to international capacities on submarine cable where the competition is not sufficient to meet the above objectives. 17

18 Thank you! Merci! Katia Duhamel Avocat à la Court, Senior Expert Telecom hipssa/activities/wa/wa-5.2.1_fr.html