1. Licensing Rules for Communications Networks and Services CONSULTATION DRAFT FEBRUARY 2014

2. Agenda  Legal Mandate  Goals of the Draft Licensing Rules  Key Proposals  Interactive Discussion 2/20/2014CCK Licensing Consultation2

3. Legal Mandate  The Communications Act of 2012 provides for a liberalized communications market  CCK is developing a regulatory framework— rules to enable us to realize the goals of the 2012 Act  Licensing rules are a tool for enabling new service providers to enter the market 2/20/2014CCK Licensing Consultation3

4. Goals of the draft licensing rules Promote market entry through a simple application process and low application fees and license fees Foster investment and innovation by encouraging individuals and businesses to apply for a range of license categories Provide incentives for new and existing licensed service providers to provide services in the Outer Islands and thus improve access to communications services for everyone 2/20/2014CCK Licensing Consultation4 2 2 1 1 3 3

5. Types of Licenses 2012 Communications Act  Individual – issued to authorize ownership or operation of communications networks and services  Class – issued to authorize the provision of communications services Draft Rules 1.Individual – issued for all communications networks except for private networks 2.Individual –issued for all services that may be limited: 1.Due to radio spectrum and or numbering resources 2.due to sustainable competition 3.Class – issued for services where no limit is foreseen (e.g. Internet Café) Draft Rules 1.Individual – issued for all communications networks except for private networks 2.Individual –issued for all services that may be limited: 1.Due to radio spectrum and or numbering resources 2.due to sustainable competition 3.Class – issued for services where no limit is foreseen (e.g. Internet Café) 2/20/2014CCK Licensing Consultation5

6. Who is Eligible?  A company incorporated under the Companies Act  A natural person over age of the 18  A Kiribati government agency, organization, or statutory body 2/20/2014CCK Licensing Consultation6

7. Individual Licenses: licensing process  Applications will be evaluated on a case by case basis according to merit  Licenses may be limited. For example, in cases where an applicant is applying for a license to compete in the same market as an existing license holder, CCK will base its decision according to the promotion “of sustainable and workably competitive markets” [Section 31 (2)]  Timeframe for processing applications is 45 days or less 2/20/2014CCK Licensing Consultation7

8. Individual Licenses: categories 2/20/2014CCK Licensing Consultation8 Provides a range of mobile communications services to the public by deploying own infrastructure or by leasing infrastructure from others Mobile Cellular Provides a range of fixed line communications services to the public by deploying own infrastructure or by leasing infrastructure from others Fixed Line Network owner who leases network elements to third parties for a fee Network Infrastructure Any mobile or fixed communications service provided by an independent, local service provider in the Outer Islands Independent, local Provides a gateway between a national telephone network and one or more other international gateway exchanges International Gateway Provides infrastructure that enables the exchange of Internet traffic within the country and/or with international Internet exchanges Internet Exchange Provides Internet Services to the public, except for Internet Café Services Internet Services Provides local/international prepaid calling cards through the resale of telephony services Prepaid Calling Card

9. Individual Licenses: annual fees Fees  Mobile Services: 1 – 3% of Annual Gross Revenues (AGR) for licensed services  All other license categories are set at 1.5% of AGR for licensed services Payment  Payments are twice yearly - 50% due after 6 months based on estimated annual revenues  50% due after 13 months based on actual annual revenues  Other payment plans may also be arranged with the mutual agreement with the CCK and Service Provider 2/20/2014CCK Licensing Consultation9

10. Incentives for Outer Islands Lower annual license fees based on national geographic coverage for mobile cellular services: >75% coverage = 1% AGR >50% coverage = 2% AGR <50% coverage = 3% AGR Zero annual license fee for the first 5 years of operation for independent, local operators who provide fixed line or mobile cellular services in the Outer Islands A Licensee who provides public communications services in the Outer Islands may also be eligible for any designated subsidies and/or other assistance that becomes available as a result of the establishment of a Universal Access Fund. 2/20/2014CCK Licensing Consultation10 1 1 2 2 3 3

11. Class Licenses Draft Rules  No limit on the number of licenses  License granted upon registration  Licensee is responsible for abiding by any related rules and conditions  No application or annual license fee Licensing Proposal Internet Café – places where the public can access the Internet 2/20/2014CCK Licensing Consultation11

12. Application Forms Individual LicenseClass License 2/20/2014CCK Licensing Consultation12

13. Application Fees Individual License  $1500 for mobile cellular licenses  $1000 for fixed line, local independent providers in the Outer Islands, Network Infrastructure,  $500 for International gateways and Internet Exchanges  $250 for Internet Services, Prepaid Calling Cards (resale) Class License  Zero for Internet Cafes 2/20/2014CCK Licensing Consultation13

14. Interactive Discussion (Q1-4) License Categories 1.Can you recommend any other license categories that should be added to the list of proposed Individual licenses? 2.Are there any other license categories that should be considered as Class licenses besides Internet Cafes? If so, why? Incentives for Outer Islands 3.What is your view regarding the proposed incentives for encouraging the rollout of services in the Outer Islands? 4.Do you have any other suggestions? 2/20/2014CCK Licensing Consultation14

15. Interactive Discussion (Q5-7) License Fees for Individual Licenses 5.In your view, are the proposed fees for Individual licenses affordable? If not, please explain? 6.Is a license fee based on a percentage of revenues preferable to a prescribed flat fee of AUD 5,000 for example? Please explain your reasons for agreeing or disagreeing? 7.Should different types of fees be paid depending on the license category type – i.e. Should Internet Service Providers and Calling Card Companies for example pay a flat fee and mobile and fixed line service providers pay a fee based on percentage of annual gross revenues? 2/20/2014CCK Licensing Consultation15

16. Interactive Discussion (Q8-10) Payment Plan for Individual Licenses 8.The proposed payment plan for Individual Licensees includes 2 payments: 1 after 6 months based on estimated annual revenues; and a 2nd after 13 months based on actual revenues. Do you agree with this approach? If not, please explain? Application Process 9.Is the application process easy to understand and comply with? Are the fees reasonable? Other Issues 10.Do you have any other issues or concerns that you would like to discuss? 2/20/2014CCK Licensing Consultation16

17. 2/20/2014CCK Licensing Consultation17 THANK YOU FOR YOUR PARTICIPATION DEADLINE FOR COMMENTS 27 FEBRUARY 2014 CONSULT@CCK.KI