Detecon Policy Making Workshop

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We make ICT strategies work
Dar es Salaam
29th July 2015
Connecting Coast to Coast
Workshop on Policy

The Detecon office in Johannesburg coordinates all consulting work in sub-Saharan
Africa (CASA). Most African clients are within the ICT industry.
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 ICT project expertise in 4 competence areas:
• Strategy & Marketing
• Communications Infrastructure &
Technology
• Financial Performance & Due Diligence
• Organization & Processes
 Core team of approximately 20 consultants
who are permanently based in RSA
 Between 30 and 40 consultants working on
various projects primarily in Southern Africa
 On demand support from experts from DTC
Headquarter and other Detecon locations
worldwide
 Full access to expert knowledge and skill pool
of Deutsche Telekom (DTAG)
Johannesburg Office
Responsible for: Central & Southern Africa
Central and Southern African Office
Detecon Company Profile

Detecon has successfully consulted to various players in the telco industry for more
than 25 years and has become a trusted partner to many operators and investors.
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Marketing & Sales Support
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Start up and Interim ManagementShadow Management
Start up Management
Selection of Detecon’s Global Clients
Detecon Company Profile

C2C – Policy Workshop
 Pan African connectivity and Regional initiatives
 ConnectingAfrica coast to coast
 National backbone initiatives and regional interconnect
 Changing communications landscape - rise of the OTTs
 Minimum policy framework for maximum connectivity
 Licensing – what is the minimum required
 Interconnection – are the rules up to date
 Infrastructure sharing – now everyone can play
 Rights of Way – removing the bottleneck
 Issues of local participation and local ownership
Addressing how unnecessary regulatory obstacles can be reduced to allow full regional
connectivity.
©Detecon
C2CWORKSHOPDARESSALAAM2015V5.PPTX
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Content
1. Pan African connectivity and regional initiatives
2. Minimum policy framework for maximum connectivity
3. Keeping operation and ownership in Africa
©Detecon
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Source: Many possibilities
Sea cable connectivity has become common and terrestrial fibre is now common across
Africa although there are remaining gaps.
©Detecon
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Sea Cables Land Fibre
Source: AfTerFibre

Route diversity and redundancy remains essential because cable cuts do occur and
system outage can crippling economies when they become connectivity-dependent.
©Detecon
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 African countries are heavily dependent on sea cables
for internet connectivity.
 But these cables are often cut.
 The 2008 sea cable cuts extensively disrupted internet
accessibility.
 Egypt is a key choke point,14 cables come out of
Alexandria and Cairo with eight landing at Alexandria.
 This is the route Seacom and EASSY depend on.
 The more African businesses and economies become
dependent on continuous internet and data
connectivity, the more disruptive cuts will become.
 Therefore, it is not just landlocked countries that
require route access to a sea cable but coastal
countries may also require access to alternative sea
cables for route diversity, preferably along a different
coastline.
2008 Sea cable cuts Need for route diversity

Access to Alternative routes
A country like Zimbabwe will look for route redundancy to alternative landing stations
and alternative cables, one way out is not enough.
©Detecon
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Namibia
Botswana
Zambia
South
Africa
SAT3 and WACS
WACS
SAFE, SEACOM and EASSY
SEACOM and EASSY

Regional Initiatives
Africa under the overall umbrella of the African Union has regional initiatives at several
levels aimed at improving regional cooperation and connectivity.
©Detecon
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Reference Framework for Harmonization of the telecommunication and ICT Policies and Regulation in Africa
There are a wide range of initiatives dealing with pan African integration including the
ITU HIPSSA programme and programmes supported by the World Bank.
©Detecon
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Establish harmonized policy, legal and regulatory frameworks at the regional and continental levels to create an
enabling environment that will attract investment and foster the sustainable development of competitive African
Telecommunication/ICT regional markets, infrastructures, and to increase access [of its people to the related
services].

The Central Africa Backbone is one example of a regional terrestrial backbone that is
currently being implemented.
©Detecon
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 The Central African Backbone (CAB) is a fiber-optic Internet backbone being developed to connect the countries of the
Economic Community of Central African States (ECCAS) in Africa via high speed internet.
 The countries included in the CAB project are: Cameroon, the Central African Republic, Chad, Democratic Republic of
the Congo, Gabon, Republic of the Congo and São Tomé and Príncipe. It's split up into five phases, each
phase.focusing on the fibre rollout in one or more countries.:
 CAB crosses several international borders:L
 Cameroon-Chad interconnection.
 Chad-CAR interconnection.
 Congo-DRC interconnection between Brazzaville and Kinshasa.
 Congo-Gabon interconnection between running from Dolisie along the Congo–Ocean Railway.
CAB

The world is changing - OTT players are expected to surpass established Telcos in the
long run – firstly from services that are built on top of the operator’s infrastructure.
©Detecon
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 The forecasted absolute growth rates
highlight the changing relationship
between traditional vs. future
services.
 OTT service revenues explode as:
 Services with a large customer
base move from free to “fremium”
or subscription based models .
 OTTs expand and focus their
services on mobile platforms, as
the mobile penetration rates rise
and usage behavior evolves.
 The data analytics and business
intelligence tools evolve,
increasing advertisement funding.
 This revenue explosion is built on the
back of network operators, leaving
them with network expansion costs to
accommodate the data growth.
 Operators will face severe profitability
challenges in the future.
Development of global Telco and OTT services market (2010 – 2021) The rationale for OTT growth
2021
(e)
753
702
2020
(e)
526
675
2019
(e)
368
649
2018
(e)
257
624
2017
(e)
180
600
2016
(e)
158
580
2015
137
560
2014
117
540
2013
94
519
+53%
74
497
2011
58
20122010
41
458
+1.720%
476
OTT Services MarketTelco Services Market
Source: IDATE - World Internet Services Markets 12/2013 and Detecon Forecast (e)
Unit: Billion US $

Content
©Detecon
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Creating transnational backbones across borders is difficult because of differing
regulatory regimes – what are the policy imperatives to overcome these?
©Detecon
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 National participation:
 Ensure that the economic benefits are maximized.
 Raise the ICT skill level of the population.
 Security issues:
 Lawful intercept.
 Data protection / cyber security.
 Local content enabling.
 Tax and accountability issues.
 Internet content governance.
 Can foreign government owned companies participate.
Regulatory frameworks for the following areas:
 Regional connectivity and internet bandwidth access.
 Regional roaming.
 Spectrum management.
Policy Imperatives:
 Ensure connectivity between countries.
 Telecommunications as a boost to regional
development.
 Ensure connectivity to the World Wide Web.
 Ensure redundancy and resilience – ideally by
connecting to two coasts.
 Reduce costs of communication / internet bandwidth.
 Facilitate competition and drive efficiency in service
provision.
 FacilitatingAfrican global networks.
 Creating regulatory certainty.
 Minimise investor risk.
Policy Imperatives Other considerations

The AU Nepad African Action plan 2010 – 2015 incorporates specific strategic objectives
and the achievement of regional integration.
©Detecon
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NEPAD ICT Broadband Infrastructure (UMOJA Terrestrial
Network), including the following regional network projects:
1. East African Community Broadband Network.
2. Central Africa Broadband Infrastructure Programme
(CA‐BI).
3. WestAfrica WideArea Network.
4. Southern Africa Regional Backhaul Network.
5. Northern‐Western Africa Backbone Project.
 Objective 1 – ESTABLISH HARMONIZED POLICY,
LEGAL AND REGULATORY FRAMEWORKS at the
regional and continental levels.
 Objective 2 – ACCELERATE DEVELOPMENT OF
INTEGRATED INFRASTRUCTURE that will help
bridge the digital divide.
 Objective 3 – PROMOTE E‐APPLICATIONS AND
SERVICES aimed at improving government services
(e‐government), education (e‐education), trade and
business (e‐commerce) and other social services.
 Objective 4 – INCREASE GLOBAL
COMPETITIVENESS OF AFRICA by reducing the
costs of services and enablingAfrica to integrate into
the global economy.
 Objective 5 – REDUCE OR ELIMINATE TRANSIT OF
INTRA AND INTERREGIONAL TRAFFIC out of the
continent.
AU/NEPAD Strategic Objectives in ICT Sector Priority Programmes in Broadband Infrastructure

The EU provides a very useful template for transnational regulation because it is composed of very different sovereign
states that are nonetheless required to create a borderless market in goods and services:
 Binding guideline for each member state to adapt its national telecommunications law and regulations to the framework.
 There can be and are regional differences in the regulations along with different market size and development,
 However basic principles are the same in all member states.
Regulatory independence, transparency and predictability
 National regulators have to be:
 Independent from operators.
 Independent from political pressure.
Principle of subsidiarity for state intervention
 The state should only intervene if a political (non-profit) target cannot be achieved by other means,
 The maximization of user interests in connection with ICT services are top priority for the state. This can generally be
safeguarded by promoting market entry and effective competition between private operators.
EU Regulatory Framework (1)
Model: The EU framework regulation is widely regarded as a role model for good
governance and successful sector regulation and can be adopted by other regions.
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Dynamic adaptation and limits of regulation
 Ex ante regulation is only introduced, if a market analysis for specific segments suggesting no effective competition.
 Ex ante regulation a market segment is only executed, if no effective competition exists and has to be removed as soon
as competition evolves.
 Ex ante regulation is usually only imposed on operators with significant market power (SMP) in the analyzed market.
Licensing
 Free market access as the rule:
 Market entry regardless of the public networks, capacities or services to be offered is free to anybody on the basis
of a declaration to the regulator. “Licensing” costs are limited to cover administrative costs in general.
 Regulators can restrict market entry only via limited allocation of scarce resources like frequency allocation or orbit
positions.
 Applicants have to declare start, change or cancellation of business by declaring name, ownership, address and
general trade register number.
 The regulator has to approve the completeness of the declaration within a short period of time (in Germany 1 week)
and declare that the applicant can use the rights associated with the national telecommunications law, - in particular
rights of way.
Example: EU – Licensing.
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Rights of Way
 Rights of way are not regarded as a physical scarce resource but rather a juridical bottleneck.
 Typically the Government has the right to use public roads, places, bridges and waterways for public telecom lines at no
costs.
 This right is transferred to owners and operators of public telecom networks upon request including general information
on business plan, reliability and qualification of the applicant.
 Owners of private property have to allow for usage of their property for public telecom lines, if the usage does not limit
the usage of their property in an unacceptable way.
 International entities willing to offer international fibre capacity or other ICT products have very low market entry costs in
the EU:
 They have to create a legal entity in each country of operations (with a PoP), but have a right to get a license and
rights of way.
 There is no limitation in the technology used or services offered with the exception of use of scarce spectrum or
orbit positions
 International capacity markets are not subject to any exclusive rights and do not belong to market segments that are
subject to any ex ante regulation (apart from symmetric interconnection rights).
Example: EU - Rights of Way.
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Both ECCAS and ECOWAS have been engaged in drafting regulatory frameworks that
draw on the experience of the EU.
©Detecon
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ECOWAS “Supplementary Act on the Harmonization of
Policies and of the Regulatory Framework for the ICT
Sector”
 best practice rules for independent national regulatory
authorities have been taken over from the EU.
Five draft model laws based on EU practice including:
 Draft model framework law (“draft framework law”);
 Draft model law on legal regime for electronic
communications activities (“authorization draft”);
 Draft model law on interconnection (“interconnection
draft”);
 Draft model law on universal service (“US draft”);
 Draft model law on scarce resources (“scarce
resources draft”).
ECCAS ECOWAS

A regulatory package has been agreed upon at the level of ICT experts from ECCAS member states, covering, amongst
others, following aspects:
 Terms of reference for harmonization of national policies and regulations (“Harmonization ToR”) and;
 Five draft model laws including:
 Draft model framework law (“draft framework law”).
 Draft model law on legal regime for electronic communications activities (“authorization draft”).
 Draft model law on interconnection (“interconnection draft”).
 Draft model law on universal service (“US draft”).
 Draft model law on scarce resources (“scarce resources draft”).
 All of these documents are modelled on the EU regulatory package for electronic communications networks and
services.
 All of these documents are yet to be approved and adopted by the conference of head of states in order to be
operational.
 Although not yet in force, they give an indication on the regulatory direction planned for the ECCAS.
In addition to the draft regulatory package, the ECCAS Treaty, especially its Chapter IX contains provisions of interest with
regard to the regulatory feasibility of the intended fibre cross-border interconnection links between ECCAS member states.
ECCAS Regulatory Framework (1)
Draft regulatory package for ECCAS.
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Licensing framework overview – in line with best practice
 Priority should be given to market access regimes that do not require authorizations or that rely on general
authorizations. Individual licensing shall be limited to scarce resources (spectrum, numbers, and domain
names).
 The establishment of public fixed infrastructure/networks shall be subject to individual licensing while wireless
networks and the provision of wireless services shall fall under general authorization regime (“HarmonizationToR”).
 Denial of an authorization is possible only for one of three clearly specified reasons.
 Authorized enterprises are allowed to negotiate interconnection with other providers in all ECCAS members
States (“Harmonization ToR”). This aspect is of particular importance with regard to the regulatory feasibility of cross-
border fibre interconnection links.
 For the provision of electronic communications services (including also Internet services) and value-added service, only
a declaration to the regulatory authority is requested (Article 8 “authorization draft”).
 Technology and service neutrality shall be reinforced.
 Market entry is possible for the sole establishment and operation of infrastructure/networks.
 As a matter of principle, there shall be no exclusive and special rights for any market player.
 The need to establish cross-countries telecoms networks foreseen in Chapter IX of the ECCAS Treaty and requires
each authorization regime to integrate this need.
 Member states to ensure that their regulatory authorities coordinate their regulatory procedures on authorization
upon request of a company wishing to provide telecommunications service or to establish and / or operate a
telecommunications business in more than one member state.
ECCAS Licensing Framework.
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Pricing framework overview
 The draft regulatory package provides market players in the member states with sufficient flexibility with regard to
pricing of their services:
 As a general principle, price regulation shall be considered only for operators identified by the regulatory authority
has having a significant market power (SMP operator) in a defined market, following a market analysis.
 Regulation of retail prices of an SMP operator shall be considered only as a matter of last resort (i.e. mainly pricing
of wholesale services).
 Prices of the SMP operators shall be cost-oriented, and the NRA may impose cost accounting principles.
 For capacity transmission business: In case of completion failure in this market segment, the draft package urges
national regulatory authorities to impose adequate obligations on SMP operators.
 Interconnection rates regulation is limited to SMP operators. Charging methods for interconnection traffic should be
flexible and pricing based on capacity (and not the distance).
 Accounting separation obligation for an SMP operator to prevent any cross-subsidies between interconnection
activities on the one side and other activities of the operator on the other side.
 By limiting pricing regulation to SMP operators, the approach regarding pricing regulation is to prevent overregulation.
 Primary focus is on pricing of wholesale services – which is best practice.
 The requirement for interconnection tariffs to be based on the capacity used and not the distance tackles a real
bottleneck in the region as distance based makes access to transmission capacity extremely expensive, especially for
landlocked countries.
ECCAS Pricing Framework: the approach is to prevent overregulation, concentrate on
wholesale and base interconnection tariffs on usage – in line with best practice.
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The ECCAS framework for Interconnection is structured in four items:
1. General principles
 Harmonization in the ECCAS area
 Foster both Infrastructure-based and service-based competition.
 Specific obligations for SMP operators.
 Interconnection dispute resolution by national regulators.
 Specific mechanism for cross-border interconnection disputes.
 Guarantee for “ECCAS compatible” treatment of market players: - This does not however prevent any
preferential treatment of own operators by a country, as long as the treatment of operators from a third member
state fits at least the standards of the ECCAS framework.
 Periodical review of cross-country interconnection.
 Reference interconnection offers: All (not only SMP) operators of public electronic communications network are
required to publish and update annually a catalogue of interconnection fees ((Article 5 “interconnection draft”).
ECCAS Interconnection Framework (1)
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2. Enforceable interconnection obligation
 Interconnection obligation also towards operators from other member states: Such an obligation applies also
to a request from an operator established in the ECCAS areas, as long as this request is designed to enable
provision of electronic communications services to the public.
 Obligation to negotiate in good faith.
 Maximum duration of 4 months for negotiations.
 Specified conditions for denial of interconnection:A requested interconnection can only be refused if the request is
not reasonable, especially with regard to interoperability or compatibility.
 Enforcement of interconnection by regulators out of public interest: National regulatory authorities may mandate the
two parties to realize the requested interconnection immediately until a final interconnection agreement.
3. Interconnection contracting
 All authorized providers of public electronic communications networks or services shall be free to negotiate
interconnection agreements on a commercial basis.
 Member states must ensure that there are no restrictions preventing undertakings in the same member state or in
different member states to negotiate access and/or interconnection agreements.
ECCAS Interconnection Framework (2).
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4. Interconnection tariff
 Cost-orientation for all operators:
 SMP interconnection regulation: Specific regulation applies only to SMP operators
 Objective, transparent and cost-oriented pricing:
 Flexible and capacity-based pricing (not distance)
 Price floor and threshold: Tariffs shall not be below a floor based on LRIC and shall not exceed a threshold set by
the own cost of providing the interconnection service in question
 Element based costing:
 Reference interconnection offer required
 Accounting separation and cost accounting
Overview of Interconnection
 ECCAS framework is best practice based
 However, the principle of non-discrimination needs to be fully implemented.
ECCAS Interconnection Framework (3).
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Infrastructure sharing and open access gap
 The draft regulatory framework of ECCAS explicitly addresses the requirements for infrastructure sharing.:
 Strengthening infrastructure sharing as a policy objective.
 Commercial negotiation - resource sharing shall be based on voluntary agreements
 Mandatory sharing of essential infrastructure and Conditions for mandating sharing in other cases.
 Infrastructure sharing targets, inter alia, physical co-location and sharing of ducts, buildings, towers, antennas or
antenna networks
 No mandatory sharing without public consultation
 Mandatory tower sharing by mobile operators for environmental reasons.
 Co-location and facility sharing
 The approach to infrastructure sharing and open access can be described as best practice.
 An issue that remains to be fully addressed is the lack of clear definition of the term “open access”.
ECCAS Infrastructure sharing.
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Objectives of the Special Purpose Vehicle
 The promotion of Affordable Electronic Communication Services for the African Continent on an Open Access basis.
 The facilitation of economic and social integration of the African Continent through the provision of broadband networks.
 The embodiment and promotion of cooperation amongst African countries.
 promotion of equitable ownership and participation by entities and Governments of Africa in the Special Purpose
Vehicle.
 The economic promotion and encouragement of technology transfer and skills development amongst African countries.
 The empowerment of locally-owned, small to medium enterprises through the provision of goods and services to the
Special Purpose Vehicle while being consistent with cost efficiency principles.
Ownership Principles of the Special Purpose Vehicle
 It ensures an equitable participation by private entities and/or public entities and/or Governments in all African countries.
 At all times, the majority shares in the Special Purpose Vehicle shall be held by African-owned private or public entities
and/or Governments.
 It reflects collaboration between the private and public sector within Africa.
 The ownership of the Special Purpose Vehicles is distinct and separate from capacity allocation and leasing.
 It ensures affordability of equity by prospective shareholders.
Extract from Kigali Protocol regarding SPV
The possibility of African states joining together to create a regional backbone operator
was broached in the Kigali protocol.
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Contact Sheet
©Detecon
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Roger Blackshaw
Detecon International GmbH
Building 27, Woodlands Drive,
Woodlands Office Park,
Woodmead 2191, South Africa
Mobile: +27 722727863
Email: Roger.Blackshaw@detecon.com
Christoph Schetelich
Phone: +27 11 208 1853
Mobile: +27 84 777 9710
E-Mail: Christoph.Schetelich@detecon.com
Physical Address:
Building 27 - Woodlands Office Park
Woodlands Drive, Woodmead 2054

Insights on positioning of telecommunication operators in a fast changing world with
new players and business models.
©Detecon
– 30 –

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