Sunday 5 February 2012

Contents of module

Introduction

This section looks in more depth at the most visible part of a Regulator’s work, that of licensing.

Licensing Process

Licensing is one of the Regulator’s main tasks. It involves deciding the types of licence to be issued, the number of each type to be issued and the manner in which they are awarded.

  • Types of Licence

    In order to simplify the licensing process, the trend is towards having fewer types of licence. In a number of countries there are now only two types, one for those companies that provide the network infrastructure and the second for everyone else.

    This distinction is made because it is felt that the up-front investments made by those building the infrastructure are so much greater than for other types of player that the terms under which they are licensed must be different.

    Where a range of different types of service supplier are grouped together, they are said to be issued with a ‘Class Licence’.

    However, not all countries have just two types of licence. Some countries still issue different licences for different services such as basic domestic services, basic international services, broadband services, SMATV services, satellite services, etc.

  • Number of Licences

    There is a distinct difference of approach among Regulators as to the number of licences that should be issued. Some Regulators, in the spirit of promoting competition as fully as possible, issue licences to all applicants, letting the market decide how many suppliers there should be. In such an environment, those companies that find they are unable to be profitable do not survive.

    An alternative approach is for the Regulator to decide how many licences should be issued. The number decided upon can be reached taking into account any number of considerations: excessive competition is unhealthy, more players makes control more difficult, political pressure from vested interests, etc.

    Probably the first approach is more suitable for a regulatory regime where openness and transparency are among the prime objectives.

    However, there are circumstances in which even those Regulators who prefer to issue as many licences as there are applicants cannot do that. The most obvious (though not the only) example is with licences for wireless services. The radio spectrum is limited and this in turn limits usage. The more of the spectrum that is allocated for each licence, the smaller the number of licences that can be issued.

    Therefore all Regulators, whatever the approach they would like to take, are faced with the problem of deciding on the number of licences that can be issued for some services, and in deciding how these licences should be awarded.

  • Awarding Licences

    Once the number of licences to be issued has been decided, the Regulator’s next task is to determine who should receive them. The result of this part of the process provokes, quite naturally, considerable controversy.

    There are a number of ways by which the choice can be made. Some possibilities are:

    • evaluating each application on the basis of some pre-determined criteria;
    • conducting hearings before an evaluation committee;
    • holding an auction;
    • conducting a lottery;
    • granting licences by legislative action; or
    • combining one or more of the above.

    Which of these (or other) options are chosen in each situation will depend on the circumstances.

Review of Decisions

In an open and transparent process, there is a need to have a mechanism whereby those agrieved by a Regulator’s decision can complain to an independent body.

Such independent bodies can be:

  • Ombudsman

    In some countries an Ombudsman exists whose job it is to listen to complaints and adjudicate upon them. The Ombudsman may just be for one industry, such as telecoms, or have more general responsibilities covering all industries.

  • Ministry

    In some countries, complaints may have to be made to the relevant government Ministry that has telecoms as part of its remit.

    This is not generally considered to be a satisfactory avenue for complaint because the Ministry and the Regulator often have a close relationship, with the latter often being an integral part of the former.

  • Government

    Matters of dispute can sometimes be referred to the government as a whole. Obviously, such an extreme measure is only applicable for major issues. Moreover, where this happens, it implies that the system as a whole is faulty. Either the system has been inadequately established, or it is being used by vested interests with political influence.

  • Courts of Law

    One of the most common avenues through which complaints can be pursued is the legal system. In some countries, this is all there is. Unfortunately, a legal action is often time-consuming and always expensive. Furthermore, judges are often inadequately informed on technical matters. While recourse to a court of law is an obvious choice to resolve disputes, in telecoms it has often proved to be an inadequate one. The result is frequently unsatisfactory to both sides.

Case Study

OFTA now issues the following licences:

  • Fixed Telecommunications Network Services (FTNS) Licences
  • Public Radiocommunications Service (PRS) Licences
  • Public Non-Exclusive Telecommunications Service (PNETS) Licences
  • Satellite Master Antenna Television (SMATV) Licences
  • Radio Dealer (Restricted) Licences
  • Radio Dealer (Unrestricted) Licences

Details of these licences are available on OFTA’s Website.

Further Reading

The European Commission has undertaken a great deal of work on the issue of licensing in its efforts to produce a harmonised system to cover all its member countries.

One country that has established an Ombudsman specifically for the telecoms industry is Australia. This body claims to provide free, independent, just, informal and speedy resolution of complaints about telephone and Internet services in Australia.