The current license framework has been in effect since 2006. Given the dynamic nature of the ICT sector, several factors have necessitated a review of the licensing framework, to wit:
Industry Developments
The current licensing framework has resulted in increased investment, entry of new players, innovative business models and services in the digital ecosystem. The existing licensing framework has increased the total number of operators from three (3) in 2006, to 27 operators in 2019, and improved the teledensity from 0.26 in 1996 to 63.9 in 2016/2017.
Despite these successes, the licensing framework has been in operation for over a decade, during which period, the telecommunications market has undergone significant changes with the emergence of new technologies and commercial practices. Developments and concerns such as over duplication in infrastructure roll-out and the high cost of investment, emerging markets and services, high demand for spectrum resources and regulatory arbitrage, have necessitated this review.
Under the existing framework, a new and innovative entrant may be hindered from entry by national coverage and roll-out obligations, since the existing framework only provides for National licenses. A number of new players are now seeking to offer niche services and operate in a smaller defined geographical scope.
From a regulatory perspective, it is therefore prudent that we facilitate an environment that fosters competition and innovation while ensuring consumer protection.
Regulatory Arbitrage
Regulatory arbitrage occurs when entities exploit existing gaps in legislative and regulatory classifications to accrue tax, financial and competitive benefit by avoiding regulatory obligations.
The emergence of new technologies and business models that offer communication services as defined in the Communications Act 2013, but do not fit within existing classifications of licenses, pose an increasing challenge to the existing licensing framework. In many cases, these entities offer similar or substitutable services as the traditionally regulated entities but will take advantage of existing gaps to avoid regulatory obligations or in some cases move to other markets that provide a more predictable regulatory regime.
Effective utilisation of spectrum Resources
Effective spectrum management and frequency planning is central to the aspirations of the telecommunications licensing framework and the attainment of the objectives of the National Broadband Policy 2018.
Spectrum is a finite resource that facilitates innovation and investment in ICTs. However, over the years, UCC has witnessed a surge in demand for spectrum due to an increase in the number of operators, customers and the nature of services offered. The existing licensing framework limits UCC’s ability to address the demands for spectrum in the market adequately, hence the need for a review.
The new framework seeks to address new developments in the communications industry, taking into account the Spectrum Management Guidelines, changes in policies (such as those cited in the National Broadband Policy 2018), the draft Communications Regulations as well as emergent international good practice. The draft framework proposes a three-tier assignment model including a market-oriented approach, administrative approach and class authorisation (under license exempt arrangements).
Infrastructure roll out and the high cost of investment
National Roaming
The National Broadband Policy, 2018 advocates for seamless connectivity of telecom customers and, proposes national roaming as one of the avenues through which this can be achieved. UCC believes that once the market fully adopts National Roaming, there will be no need for duplication of investment in infrastructure since roaming will enable connectivity without the need for each operator to deploy their network. This will make it possible for operators to share the resources (both active equipment and spectrum) and ultimately share costs. This will engender a seamless, reliable and efficient telecommunications network across the country.
The new framework, therefore, seeks to promote national roaming in the sector. The Commission shall ensure that all operators enter into well-structured roaming agreements to facilitate effective and seamless connectivity and enjoyment of services by consumers.
Infrastructure Sharing
Telecom infrastructure is one of the prime enablers for the expansion of the telecom services in the country and yet it is very capital intensive, requiring huge Investments over a long period.
Global trends in the telecommunications industry indicate a shift towards infrastructure sharing. Uganda is no exception, and in the recent past, the sector has moved towards infrastructure sharing models with many smaller operators opting to share infrastructure rather than build their own. This has been eased with the coming into the market of tower operators providing passive infrastructure sharing and companies laying optic fibre. The advent of infrastructure sharing in Uganda has thus far been driven more by the operators’ commercial needs to lower the cost of operation than express Government policy.
Infrastructure sharing is also now a requirement under the Uganda Communications Act 2013 and the National Broadband Policy 2018.
Infrastructure sharing presents numerous benefits, including:
- Allowing telecom tower sites to host active network components of multiple telecom service providers;
- Tower infrastructure companies provide an Integrated Neutral Host Platform that is used by diverse and often competing operators helping build a unique, scalable and successful business model for Telecoms;
- A Win-Win Situation for infrastructure providing companies & customers;
- Reduced capital expenditure and operational expenditure, therefore, easing entry into the market,
- Faster time to roll-out services cost & energy efficiencies, therefore, easing entry into the market;
- Increased Connectivity Safety & Improved Aesthetics
Providing for mandatory infrastructure sharing as a licence obligation could potentially curb duplication in high demand areas and encourage parity of infrastructure building across the country.
OBJECTIVES OF THE NEW LICENSING FRAMEWORK
- To ease market entry and increase competition and consumer choice in the telecommunication sector;
- To enhance Quality of service provision in the sector;
- To promote innovation and investment in the telecommunication sector;
- To increase broadband rollout;
- To increase local ownership in the telecommunication sector and hence reduce capital flight;
- To reduce the cost of investment in ICT infrastructure by creating efficiencies in the use of scarce resources;
- To promote a seamless transition from the existing framework into the new framework.
SUMMARY OF VIEWS FROM THE PUBLIC CONSULTATIONS
As part of the roadmap towards the development of the new license framework, on the 5th of April 2019, UCC published a public consultation paper, wherein all key stakeholders and the general public were requested to comment and provide feedback regarding the proposed license structure.
The consultation paper presented 12 thematic questions that sought to obtain views, comments and suggestions from the public regarding the salient features of the proposed license framework.
The consultation elicited written responses from most of the operators in the sector and the general public, and in summary, the views included:
- The fear that changing the framework might disrupt the sector and result in over-regulation.
- The fear that changing the licenses might adversely affect the rights of existing operator’s licenses.
- That UCC should ensure that the transition period from the current regime to the new license framework is long enough to avoid disrupting operators.
- Most respondents were opposed to the new fees, arguing that many other levies and taxes already overburden the sector.
- That OTTs should be regulated since they are providing competing services to the traditional telecom providers.
- That UCC should conduct a specific study on the listing of shares and local ownership before the same can be considered for implementation. That this will avert the risk of Uganda facing the same challenges that other markets have experienced during similar processes.
- Most operators warned UCC against implementing Number portability since this has failed in most African markets.
- Most operators welcomed the proposal to include infrastructure sharing as a key license obligation.
- That the new regime should address spectrum hoarding and speculative investors.
