TRA's Telecommunications Liberalization Roadmap Dr. Kamal Shehadi Chairman/ CEO Telecommunications Regulatory Authority March 11, 2009 UN-ESCWA, Beirut, Lebanon

2 Although reform has started with the establishment of the TRA, most telecommunications markets in lebanon are stagnant and suffer from lack of competition Current Indicators 35%Mobile Market Fixed Market Internet Market ADSL Market 2 PenetrationNumber of SP Private / State- owned Level of Competition State-OwnedMonopoly 63% (*) 1State-OwnedMonopoly 32.5% (*) ~ 16PrivateCompetition ~ 7.7% (*) ~ 8MoT / Ogero Private (bitstream, line sharing) Limited Competition (*) per household

3 Pent up demand for Mobile services High Mobile revenues High charges Lag behind in terms of new technologies Low market penetration Limited choice in mobile bundled tariffs packages Shortage of adequate investments Relatively competitive Lucrative segment New wireless technologies deployed Pent-up demand for data and internet services Shortage in international bandwidth Access controlled by the MOT High intl bandwidth prices, and non optimal allocation of bandwidth among providers Incomplete Regulatory framework Fixed Voice Relatively good copper infrastructure Regionally competitive price per minute De jure MoT monopoly Low incentive to upgrade the infrastructure and introduce new technologies Low penetration rate Stagnant growth The TRA has assessed the strengths and opportunities of the telecommunications market in its reform and liberalization process StrengthsWeaknesses Mobile Data High pent-up demand and important growth potential in all telecom markets Appropriate Regulatory framework to attract investors. Favorable social, cultural and demographic characteristics ( e.g. consumers early adopters of telecom services) Opportunities

The TRA proposes the introduction of competition across all telecoms markets while allowing LibanTelecom exclusivity over some services for a limited period of time MobileNetwork Operator Virtual Network MNVOs PSTN/ Basic Telephony Network Operator Reseller and VoIP Broadband Access National (core, metro and access) International Gateway Voice and Data Facilities Based Provider Data Only Facilities Based Provider Voice and Data Resellers 3 *** * The privatization of the mobile sector will depend on the regional and international financial markets conditions ** Two mobile operators and Liban Telecom *** Two mobile operators and Liban Telecom **** Two National Broadband Licenses, subject to CoMs decision License Award Open licensingMarket Review Notes **** *** ? ? 4

5 TRA has made significant progress on the broadband roadmap National Broadband Licenses (NBLs) with: Rights to build/offer (fixed and spectrum based) Access, National Backbone and International network/services Obligations to meet access and national backbone rollout conditions with minimum build for fiber Exclusivity period to interconnect new sites of other BL providers via its national backbone Broadband Licenses (BLs) : National or regional With or without spectrum Existing Data Service Providers continue to use their national Microwave backbone to backhaul existing sites BLs originally rely on the NBLs for new site connectivity The TRA plans to issue two types of Broadband Licenses Broadband Deployment Timeline Broadband Policy Statement Spectrum Re-farming & RTU fees ROW & Ducts Decree Draft RFA for Consultation (including BB License) Launch of NBL Auction April 09 July 09December 09 Q2 09

6 TRA plans to launch an international public auction in order to establish across Lebanon, best in class core, Metropolitan, and access networks Currently the Only provider of National Internet and Data Transmission Needs major upgrade of National and International capacity Allow CS/CPS whenever the market permits Fixed MoT Infrastructure Provide a best in class alternative National Networks (core, metropolitan and access), enabling the National Transmission of Data and provision of High Speed communications National Broadband Licenses Unleash competition on the access level and provide more choices to consumers ( including by incumbent data service providers) Broadband Licenses competition

7 Illustrative Sketches of the Core / Metropolitan and Access Networks The National Broadband Licenses and the Broadband Licenses will complement each other to provide competition at all levels of the broadband value chain Beirut Core TRA has already issued interim license for Incumbent DSPs. TRA has started a spectrum refarming exercise, which is intended t to free up some of the spectrum currently used by DSPs and other operators and make it available to new entrants as well as incumbents in a manner that allows optimal use of spectrum Liban Telecom National Broadband Licenses Broadband Licenses for own use only Liban Telecom National Broadband Licenses Broadband Licenses for own use only Access Ras Beirut Liban Telecom National Broadband Licenses Broadband Licenses Liban Telecom National Broadband Licenses Broadband Licenses User1 Ras Beirut Ras Beirut Mazraa Ras Beirut Ras Beirut Achrafieh Sin El Fil Metropolitan Tripoli Bekaa Saida Lebanon Liban Telecom National Broadband Licenses Liban Telecom National Broadband Licenses Beirut

The regulatory framework and the public consultation process adopted by TRA aim at ensuring the success of liberalization Spectrum Management and Licensing Regulation Drafting StageDraft Ready StageConsultation Stage Final Review (TRA Board) Issued Type Approval Regulation Accounting Separation Regulation Spectrum Pricing Opinion Consumer Affairs Regulation Significant Market Power Regulation Unbundling Regulation Broadband Policy Statement Lebanese National Frequency Table Liberalization Roadmap Licensing Regulation Licensing Regulation Interconnection Regulation Decisions: VSAT, Trial IPTV Spectrum trial Allocation for MoT / OGERO Decisions: VSAT, Trial IPTV Spectrum trial Allocation for MoT / OGERO VOIP Policy Statement Pricing Regulation National Roaming * Interconnection Interim Pricing Decision Spectrum Refarming and Packaging Plan Quality of Service Regulation Decision for establishment of call centers Universal Service CS / CPS Improving FM Broadcasting * Decision approved by the board, but will be issued concurrently with the Mobile Auction Award. Numbering Regulation Numbering Regulation Access to Information Regulation Digital Migration Strategy for TV Broadcasting National Numbering Plan

9 Lebanon's commitment Bring the country back to the international telecommunications scene through market liberalization Reconnect the Lebanese population with the world by building a thriving, innovative, and competitive telecommunications market place, driven by a technologically advanced infrastructure-based sector and offering services at internationally competitive prices and quality Promote the interests of telecom Lebanese consumers in the market to make sure they are getting good quality of service at affordable and competitive prices and that their right to safe, secure and confidential access to telecommunications is safeguarded TRA is providing a regulatory framework in line with international best practices