TRA Roadmap for the Liberalization of Telecommunications Broadband Workshop In cooperation with the Partnership for Lebanon January 17, 2008 Beirut, Lebanon

TRA Vision for Broadband Market Objective Introduce competition in 2008 in all the markets for telecommunications services except basic telephony services FocusFocus Liberalize national data services to promote broadband services Open market for mobile telecommunications and international (voice and data) services Liberalization of basic telephony services planned for January 1, 2010 Promoting Competition Introduce various forms of competition to the market: Facilities-based competition Service-based competition Encourage competition between different technologies 2

Broad View of Market Situation 3 ADSL Recap Signing of MoU in January 2006 between private and MoT Unbundling the local loop Stating principles of fair competition Project launch delayed till Q Bit Stream and Line Sharing Guidelines drafted by MoT Line-sharing, and retail prices are set by MoT and issued by decree Key elements are missing ADSL Market Overview Market share unevenly split between private and MoT No clear and publicly announced timetable for further CO preparations Limited service offering Recent price reductions by private companies have introduced some competition Severely limited international bandwidth leading to high contention ratios International bandwidth allocation regime not transparent and favors one of the providers - MoT Current Situation

TRA Actions to Promote Broadband 4 Issue 3 Metro / Core / International licenses Regularize existing ISP/DSP licenses (duration, scope of services, etc) Open licensing for access Interconnection and Access regulations Infrastructure Sharing Unbundling Regulations (and MoT Reference Offer for Data Access) Accounting separation for Liban Telecom Efficient spectrum use Optimum spectrum pricing Market Structure & Licensing L Regulatory Framework R

** Two licenses for the mobile operators and two others for the core broadband providers * Assuming that Liban Telecom will be formed in 2008 Proposed Liberalization Roadmap 5 L MobileNetwork Operator Virtual Network Operator FixedNetwork Operator Reseller BroadbandAccess Metro / Core International Access Facilities Service Provider Reseller Broadcasting Transmission Value Added Service Provider 3 License Award Open licensing Market Review * ? 3 ** 4

Core/metro/access Nationwide service International gateway year license Awarded through auction if competing applications New Broadband Licenses 6 Core/metro/access Nationwide coverage International gateway L TRA is considering whether and how to award one of these licenses to a consortium of DSPs TRA is considering how to license geographically- restricted metro licenses (including municipalities) Liban Telecom License Two Metro / Core / International Licenses New metro/core licensees have access to international gateway at fair, reasonable rates Licensees obligated to provide interconnection to other licensed operators Allowed interconnection at international gateway, national nodes, IXPs Open Access obligation to metro/core and international gateway New metro/core licensees have access to international gateway at fair, reasonable rates Licensees obligated to provide interconnection to other licensed operators Allowed interconnection at international gateway, national nodes, IXPs Open Access obligation to metro/core and international gateway

Regularization of DSP Licenses 7 Revenue Sharing International Bandwidth Radio Frequency Assignment Frequency Pricing TRA Vision Policy / Broad Vision Draft Licenses Consultation (Limited to DSPs) Issue / Publish Licenses TRA is preparing draft DSP licenses Frequency assignment International capacity (voice excluded) L Status of revenue sharing (and percentage) Frequency pricing Current Situation Pending Issues Licensing Roadmap

Broad View of TRA Regulations 8 R Spectrum Management Regulation Price Regulation Interconnection Regulation Drafting Stage Draft Ready Stage Consultation Stage TRA Review Stage Issued Type Approval Regulation National Frequency Plan Accounting Separation Regulation Interconnection Interim Pricing Decision Spectrum Pricing Regulation Consumer Affairs Regulation Quality of Service Regulation Significant Market Power Regulation Unbundling Regulation

Infrastructure Sharing: Benefits and Risks Infrastructure Deployment Shared Infrastructure Costs – Capex reduced Resource Maximization Reduces waste caused by infrastructure redundancy and duplication Competition and Prices Reduces barriers to entry, increases competition and lowers prices to end- users Environment Reduces impact on landscape Investment may be discouraged if cost of building network far greater than cost of sharing Reduces backup infrastructure in case of high usage, security risks, or environmental crises Price collusion – though mitigated by appropriate regulation No significant risks 9 R BenefitsBenefitsRisksRisks

Infrastructure Sharing: TRA Policy 10 Civil engineering and non-active elements of a network (e.g. ducts, towers, and masts) Geographical areas where it is not economic for multiple operators to build infrastructure Geographical areas where environmental concerns are particularly important (e.g. proliferation of mobile network masts) R TRA wants to promote infrastructure-sharing especially regarding:

11 Radio Frequency Assignment & Pricing Appropriate frequency pricing Technology neutral Licenses Frequency assignment regime tailored to scarcity of, and demand for, spectrum Freeing up much of the spectrum for commercial activity Optimal use of frequency Encourage efficient use of frequency Encourage investment in wired infrastructure Free up unused frequencies and open room for newcomers Auction Beauty Contest First Come First Serve R ObjectiveObjective TRA Policy Efficient Pricing will… Allocation Methods

12 Long Term Goals Provide state-of-the-art telecom services and infrastructure Attract investments Widen public access to telecom services Increase consumer choice and improve customer experience Increase competition in the Lebanese telecom market Develop capital markets Create high value-added jobs TelecomTelecom ConsumerConsumer EconomyEconomy