Telecommunications Regulatory Commission of Sri Lanka

Introduction

The attached document represents DNTA’s final recommendations for the new National Telecommunications Policy (NTP) for Sri Lanka, developed under the World Bank sponsored consultancy to the Telecommunications Regulatory Commission of Sri Lanka (TRCSL). This document was prepared following extensive consultations with Commission staff, numerous senior representatives of telecommunications industry companies, users, and government agencies. It includes our proposed terms for the new NTP in all areas of industry policy and regulation.

The Policy is comprehensive and detailed, taking into account a wide range of issues

raised by government and industry. Some of the highlights of the proposed Policy include

the following:

Support for the establishment and promotion of the Sri Lanka Information Infrastructure (SLII), including focus on new Information and Communication Technologies (ICTs) such as the Internet, Electronic Commerce, and other forces of convergence in the industry

Greater independence and authority for the TRCSL to regulate the ICT sectors, as well as complete transparency and public participation in its procedures. Restructuring of the organization, establishing a separate budget, and consideration to change the status of the Commissioners to full-time positions. Also strengthening of the Commission’s spectrum management functions and capabilities

Transformation of the telecommunications market structure and regulation toward a more liberalized, technology-neutral model

Establishment of an explicit Universal Access policy, to promote access to ICTs in rural areas and for all citizens

Commission responsibilities for regulating tariffs, quality of service, and consumer protection

National Telecommunications Policy Final Draft

Objectives and Vision

This Policy establishes the objectives and vision for the evolution of the Information and Communications Technology (ICT) sector of Sri Lanka. These are: To create a communication environment that allows optimal opportunities for all Sri Lankan citizens to participate fully in the interdependent global information economy, by:

Creating the conditions for businesses located in Sri Lanka to engage in all forms of electronic commerce using state-of-the-art ICTs, and thereby creating skilled and rewarding employment for Sri Lankans

Creating the conditions for all citizens, be they resident in Sri Lanka or elsewhere, to support their economic and personal relationships and communicate with their government through efficient and economical use of ICTs

Using ICTs to improve governance.

In order to achieve the above objectives, it is important to consolidate and build upon the present competition-centered communication policies that have made Sri Lanka a model for the developing countries, by § Creating the conditions for the adoption of cutting-edge, convergent ICTs centered on the Internet, including the shift to Internet Protocol-based, multimedia-capable networks

Giving priority to mechanisms of low-cost access to the Internet including wireless terminals and creation of innovative modes of self-financing multimedia access such as rural telecenters

Creating the conditions for continued private investment in the communication sector by ensuring a stable and transparent policy and regulatory environment, consonant with Sri Lanka’s international commitments

Ensuring the efficient management of bottleneck facilities, including the frequency spectrum, numbers, and rights-of-way

Encouraging and supporting research and development in the industry, including participation by Sri Lankan universities and private sector operators in regional and global R&D consortia and projects.

In order to ensure that measurable progress is made in achieving this Vision, it will be necessary to create specific rolling, benchmark targets:

Based on data from SAARC countries, with the aim of remaining in the leading position excluding the micro-states

Sri Lanka Information Infrastructure

It is the policy of the Government to promote the broad development of a comprehensive Sri Lanka Information Infrastructure (SLII). This Information Infrastructure encompasses all facets of the rapidly evolving ICT sectors, which interact and reinforce each other at man levels of technology and the market. These include:

Communications and Information Services. These are services that permit the creation, processing, and transmission of information, including fixed and mobile telephone services, data communications services including Internet access, and cable television and broadcasting services, among others. These are the services on which all other IT related activities are dependent, and are therefore the main focus of this Policy. Policies regarding these services must be closely coordinated with policies regarding the other aspects of Information Infrastructure, including the Information Technology policy developed by CINTEC, the National Development Plan of the Department of National Planning, and other policies to be established by related branches of the Government.

Information Technology, Software, and Equipment. These are the physical facilities, equipment, computers and related hardware and software that are at the heart of the Information Infrastructure. This sector covers consumer products as well as equipment required by businesses and providers of communications and information services, and includes both imported and domestically manufactured equipment. Access to all types of IT equipment must be facilitated to the greatest extent possible, by minimizing regulatory barriers as well as import tariffs and other restrictions.

Human Resources, Intellectual Capital. The role of individual citizens in establishing and promoting the Information Society is paramount. Sri Lanka’s greatest resource for development is the innovation, creativity, diversity, and energy of its people. Policies must ensure that all citizens are given the maximum opportunity to contribute to and benefit from the ICT revolution. This includes support for IT education curricula at every level of schooling, access for employees to IT training, and broad opportunities for individuals to express their ideas and

concerns in the social, political, and cultural realms, by means of Information Technology. There is a particular need to support development of skilled personnel in the telecommunications sector, as a basis for continued sector growth

The Government recognizes that dramatic new developments have been occurring in the ICT sector in recent years, transforming traditional notions of separate services, technologies, and market segments. The patterns of industry convergence, and the evolution of new means of creating, storing, and transmitting information, require new approaches to public policy and regulation. The opportunities created by these changes will best be realized by encouraging continued innovation and creativity in all market segments, with the needs of the end users being the paramount consideration. In particular, the Government will support and promote the following developments in the Sri Lanka Information Infrastructure:

Internet. The emergence of the Internet permits the unlimited sharing of information and communication throughout out the world instantly and economically. All efforts will be made to expand access to the Internet, including multimedia information sites, electronic mail, and other means.Special attention will be paid to promoting development of Sri Lanka based information content. This Policy also emphasizes the creation of adequate transmission capacity for Internet access, and reasonable prices for Internet services and underlying data transmission services.

Electronic Commerce. New means of conducting business utilizing information and communications technologies are transforming the global economy. Sri Lanka must continue to follow these trends and encourage national businesses, large and small, to take advantage of these technologies to expand markets and increase employment. In particular, the Government will encourage the development ofSmall, Medium, and Micro Enterprises (SMMEs) that engage in electronic commerce, in both the domestic and the export sectors. A primary focus of implementation and regulatory functions under this Policy will be to support e-commerce development wherever possible. In addition, the Ministry will help coordinate and participate in efforts by other government departments to establish common policies on the legal, technical, financial, and trade issues that arise in relation to electronic commerce. In this effort, the Telecommunications Regulatory Commission shall play a leading role in coordinating governmental and industry efforts.

Electronic Government. The Government can improve its public services and further promote the growth of ICTs throughout the country by adopting widespread applications of these technologies within its own operations. Wherever possible, Government agencies and departments should emphasize ICT-based initiatives, particularly in the areas of public education, as well as health care, and public information services.

Wireless Mobile and Fixed Services. The fastest growing segments in the telecommunications field are those utilizing radio transmission technologies to provide mobile telephone and data services, as well as fixed Wireless Local Loop networks. These services offer all of the capabilities of traditional wireline telephone networks, as well as many new services and features. These technologies contribute greatly to the growth and diversity of the ICT sector. The Government supports all measures that encourage continued expansion of these technologies, subject to appropriate and efficient utilization of the electromagnetic spectrum.

Broadcasting and Multimedia. Traditional broadcast television and radio technologies are fast converging with the telecommunications field, by means of cable television systems, fiber optic and other terrestrial telecommunications networks, and the Internet. Audio and video information is no longer distinct from voice or data communication, and the rationale for wholly separate treatment of these media is becoming obsolete. The Government will encourage rapid expansion of multimedia information and entertainment services, in particular the growth of cable television systems and other multimedia broadband networks that provide advanced, interactive services. Where possible, these technologies should continue to be integrated with other communications networks and services, to promote rapid and cost effective development. In addition, special emphasis will be placed on promoting the development of information content, in all media, that is Sri Lankan in origin and focus, to reinforce national and cultural interests and values.

The trends of convergence in the telecommunications sector and the evolution of the SLII require that this Policy address all aspects of the Sri Lankan ICT industries in an integrated manner. In addition, this Policy must be closely coordinated with the policies and plans of other sectors of Government, including the Ministry of Finance, the Department of Planning, the Ministry of Broadcasting and Media, the Ministry of Science and Technology, the Ministry of Trade, and other Ministries and agencies.

The Telecommunications Regulatory Commission (TRC)

Commission Independence, Governance Structure, and Authority Achievement of the objectives of the Policy requires significant, long-term domestic and foreign investments. The stability provided by a coherent national policy framework, implemented by an independent, professional and transparent regulatory commission is widely recognized as essential to long-term domestic and foreign investments in this vital infrastructure sector. An effective national policy therefore must include provisions for strengthening the independence of the Telecommunications Regulatory Commission, the

transparency of its procedures and competency of its staff.

Sri Lanka will honor its commitments to conform to the regulatory principles of the World Trade Organization’s telecommunications services agreement, by ensuring that the TRC becomes completely independent of any operator or service provider in the ICT sector. The TRC will furthermore be accorded greater autonomy from the Government. This will ensure that its decisions are unbiased and not subject to improper political or industry influence.

The TRC must be as professional and efficient in its functions as the private companies that it regulates. It will accordingly be restructured so that its internal organization and dealings with all stakeholders including the operators, the users, the Government, and the public in general reflect a private sector orientation. Its professionals must be of the highest quality and integrity. To attract and retain top quality staff, Commission compensation, employee benefits, career opportunities, and working conditions, as well as performance expectations, should all reflect standards of the private sector. The compensation and human resources development policies of the Commission shall be exempt from the general provisions for the public service to the extent feasible, on the basis of a new

set of administrative and financial regulations that will be developed for the specific needs of the regulatory agency and will be adopted by the Commission is consultation with the Ministry of Public Administration.

To ensure its independence and impartiality, the TRC’s budget will be made independent of the Government budget, to be funded by the cess charges imposed upon licensed operators. Responsibility to administer the TRC’s budget will be vested in the independent Commission. The budget will be submitted for information to the Government and will be made publicly available. The Commission will be subject to the oversight of the Auditor General who will submit periodic reports to Parliament. However, it is desirable that the Auditor General develop alternative criteria of acceptable practice designed to facilitate efficient and honest procurement practices appropriate for a private-sector oriented organization.

The subject matter and importance of Commission activities require that decisions be made rapidly and that the Commission members be in a position to make such decisions in the most informed manner. The Government believes that this is best achieved by a continuation of the current structure of the Commission with the following modifications:

The Chairman of the Commission shall be an eminent person from either the private or public sectors. He/she shall be nominated for the position by the President , subject to approval by the appropriate

committee of Parliament. The position shall have security of tenure per the current provisions.

The Director General shall be appointed as at present by the Minister in charge of telecommunications. Optionally, the Minister may also appoint three Deputy Director Generals for each of the main operating sectors within the Commission: Technical, Economic, and Administrative. The Director General’s presence (or a DDG or other senior official as his representative) shall be required at all meetings, but he/she will be a non-voting member of the Commission. However, day-to-day regulatory decisions and rulings shall be within the authority of the Director General, without requiring the

Commissioners’ approval (except that the Commissioners shall rule on all appeals and motions for reconsideration).

The Minister shall also be entitled to nominate one of the senior officials of the Ministry (above the rank of additional secretary) to serve as a full-time Commissioner. This member shall serve at the pleasure of the Minister.

There shall be two additional full-time Commissioners, appointed by the same process as the Chairman. These shall also be prominent citizens, with experience in technical, economic, and administrative matters. The terms of these Commissioners shall be staggered, with one expiring each year. These members cannot be replaced, except due to malfeasance or resignation. Separate provisions must be made to adequately compensate the Commission members for their participation.

TRC’s Regulatory Responsibilities and Procedures

The Telecommunications Regulatory Commission is responsible for regulating and monitoring the development of the ICT sector, and for ensuring that competition in the market is as open, fair, and effective as possible. The specific responsibilities of the Commission include the following, which are described in greater detail elsewhere in this Policy:

Regulation for competition

Maintenance of a competitive environment by the enforcement of general competition

Law principles specific to network industries such as interconnection

Establishing a general framework of open entry, subject to non-burdensomeand

transparent licensing where appropriate

Remedying information asymmetries that may preclude the creation of a proper

competitive environment

Regulation of oligopoly/monopoly

Price regulation

Consumer protection

Regulation of bottleneck facilities and scarce resources

Social regulation

Universal access

Emergency preparedness

All of the Commission’s procedures for issuing rulings or decisions will be entirely transparent, and will allow the affected operators, customers, and other interested parties the opportunity to contribute their views in a public forum. The Commission will take account of all relevant interventions when making rules, taking decisions, and ruling on contested issues. Commission decisions will be made in a timely and public manner, setting forth the detailed reasons and analysis behind each ruling. Any party that disagrees with a TRC decision will have the right to petition for reconsideration, consistent with the regulatory principles of the Act and this Policy. The Commission shall rule expeditiously on

reconsideration petitions. All decisions will be published and available for review in both printed and electronic format, including via the Commission’s Internet Web site.

Regulation of Bottleneck Facilities and Scarce Resources

Spectrum Management

Development of telecommunications, especially in rural areas, is very much dependent on the use of radio frequency spectrum. Radio frequency spectrum is also needed in increasing quantities by the WLL and the cellular mobile operators, broadcasters, civil aviation authorities, the military, police and security organizations, Government departments, and others. The new generation of wireless mobile services referred to as UMTS or Third Generation will require large new allocations of spectrum. Managing the use of this scarce resource among these competing uses is the responsibility of the Telecommunication Regulatory Commission. An important priority of this Policy is to reinforce the planning and allocation as well as the spectrum assignment, monitoring, and control activities of the Commission. The current staff levels will be augmented and supplementary training will be provided where needed. This will ensure that the spectrum management unit of the TRC is made up of a highly qualified team of professionals, who will provide an efficient, timely, and unbiased service to all users of the frequency spectrum in Sri Lanka.

The first task of the reorganized and strengthened Frequency Management Division of the Commission shall be to conduct a complete review of the present spectrum allocations and assignments in Sri Lanka, and of past policies and practices for assigning spectrum. Thereafter, all spectrum practices will be streamlined and all procedures from allocation to monitoring and control will be made completely transparent and nondiscriminatory.

Current and potential users of spectrum will have free access to the Master Frequency Register subject to security considerations. The TRC will, furthermore, review and establish a fair and proportionate scheme for pricing of spectrum use. This price will reflect the cost of administering, controlling, and enforcing this use. An important requirement for improved spectrum management is better coordination between the TRC and the National Defence, which make extensive use of radio frequencies. The Commission shall convene a high level meeting of senior signal engineering officers of

the various military and police branches, together with TRC’s senior frequency management and technical personnel, to review existing policies and practices for frequency allocation and management related to these national security needs. Thereafter, the Commission shall conduct consultations and coordinate its frequency management policies with the Military, including coordination of Defence Ministry approval of imported radio equipment.

In the ongoing implementation of its spectrum planning, allocation, and policy making functions, the TRC will consult regularly with the Spectrum Policy Committee, which will represent all users of spectrum in Sri Lanka including the military, the police, the operators of wireless networks (including both licensed mobile services carriers and other telecom operators), the broadcasters, and civil aviation. All important decisions concerning planning, allocation, and general policy concerning the radio frequency spectrum shall be considered in coordination with this Committee, as well as through public consultations, which will be open to all interested parties (except those that must be limited for security reasons).

Rights of Way

In order to ensure fair competition, to minimize cost and public inconvenience, and to protect the environment, access to public rights-of-way, towers, telephone poles, underground conduits, international cable landing stations, and other physical support structures will be shared among operators to the greatest extent possible. The owner of a shared facility will be responsible for its maintenance and for the connection and engineering of other occupiers’ equipment.

Legislation shall be modified to ensure that the Commission has jurisdiction and authority to ensure that operators have reasonable and timely access to necessary public rights of way, subject to appropriate local safeguards and operator liability for costs and damage. Upon adoption of this Policy, the Commission shall convene hearings, including representatives of both operators and regional and municipal governments, to establish standard terms, conditions, and procedures for granting access to public rights of way in a fair, non-discriminatory, and expedited manner.

Shared use and related costs will be allocated equitably among all operators occupying a facility. The Commission shall facilitate and review negotiations concerning the terms and conditions, including cost allocation, for such shared uses. The Commission shall also establish requirements to allow competing operators to co-locate their equipment on each others’ premises, under similar terms and conditions. Terms of facility sharing should be determined through inter-company negotiations, subject to Commission review and intervention when disputes arise.

Space Segment

TRC will be responsible for ensuring that access to space segment through Intelsat or any other global or regional satellite system is transparent and non-discriminatory. With respect to Intelsat, the Government will continue as Signatory, and will ensure that no operator, which has the necessary permission, is denied access to space segment on the Intelsat system or on any other satellite system.

Numbering Plan

The Commission shall expedite the updating and introduction of a new national numbering scheme for all telephone operators within one year from the adoption of this Policy, subject to a feasible implementation plan. The Commission will further promote the introduction of number portability in Sri Lanka, to the extent this is technically and economically feasible. All fixed service operators that are allocated blocs of telephone numbers must contribute to the maintenance of a universal directory database, which will be maintained by an authorized private sector organization, under Commission supervision, on a shared, non-discriminatory basis, and available to all telephone operators and customers at reasonable cost.

Internet Domain Names

The Council for Information Technology or CINTEC is responsible for administering Sri Lanka’s Internet Domain Name System (.lk). TRC will have the responsibility to ensure that administration of this resource is carried out in a non-discriminatory, transparent manner.

Market Structure, Liberalization, and Competition

It is the policy of the Government to promote the widest possible development and availability of information and communications technologies and services in Sri Lanka. These services will be provided in an open, market-oriented environment, which allows private sector companies maximum flexibility to develop the sector in response to consumer demand and public needs. Traditional limitations or barriers to market entry will be reduced or eliminated in favor of a liberalized environment which allows the forces of the market and technology to determine the most effective means to provide services to end users. The primary role of the Government, through the TRC, will be to facilitate fair and effective competition in all market segments, while supporting the expansion of the industry to the greatest extent possible.

Information and Communications Market Structure

The present market structure for information and communications services in Sri Lanka consists of various distinct market segments, which have been defined by traditional technological and service characteristics, and by the terms and restrictions contained in operator licenses. Under this new Policy, given the changing market and technological forces in the industry, the telecommunications market structure in Sri Lanka should evolve toward a technologically neutral, open and convergent status. Certain distinctions may remain for purposes of licensing, regulation, and competition policy, for example between public switched access networks and dedicated transmission networks, or for those services depending upon scarce resources. The primary objective of this Policy, however, is to remove artificial technology and service barriers, and to encourage the forces of convergence and market innovation.

Cross-ownership

In keeping with the principles of encouraging open markets and supporting the trends of industry convergence, owners of telecommunications networks and facilities will generally not be prevented from offering multiple and diverse services to their customers over those networks, nor will they be unduly restricted from obtaining further ownership interest in other telecommunications or information service networks and operations. This policy will be subject, however, to specific requirements governing fair competition practices, as identified elsewhere in this Policy. Operators that are deemed to have significant market power by the Commission or that have control over bottleneck facilities shall be subject to structural and behavioral regulation to ensure that competition in other markets is not adversely affected. The Commission shall establish clear guidelines for the determination of significant market power. Undue restrictions shall not be placed on operators’ establishment of affiliates and subsidiaries.

Telecommunications operators that do not have control of scarce resources or do not possess

significant market power will not be restricted from cross-ownership of multiple networks or services in various market segments.

Manufacturing, Construction, and Equipment Supply

The Government encourages the growth of domestic capacity to manufacture telecom-munications

equipment, as well as Sri Lanka based facility construction and equipment supply companies. All

companies operating in these markets shall be treated in a competitively neutral, non-discriminatory

manner, whether they are independent or affiliated with telecommunications operators. With regard to import duties on foreign equipment, all vendors of such equipment shall receive the same treatment,

whether requirement to pay duties or exemption therefrom.

Construction of telecommunications network facilities by operators or subcontractors must conform to local and national standards for quality and professionalism. Operators whose network construction causes damage or disruption to public or private property shall be obligated to compensate the owners of such property.

Further Market Opening

To achieve the objectives of an open, technologically neutral, and competitive market will require significant changes to the present licensing and regulatory regime, and to the status of existing licensed operators and service providers. While commitments and restrictions contained in current licenses will be honored, this Policy requires a rapid move away from market entry barriers, toward a more open, liberalized environment. Accordingly, the TRC will implement the following specific market opening initiatives:

Public retail switched access networks

The exclusivity clauses in the present licenses for SLT (fixed domestic wireline telephone services and international telephone services) are due to expire as of August, 2002, and for the Wireless Local Loop operators (domestic fixed WLL telephone services) potentially as soon as of the end of 2000 (depending upon whether the existing carriers meet certain license conditions).

Following the termination of these exclusivity clauses, there will be no limitation on the licensing of operators or service providers to offer either domestic or international telephone services. Companies wishing to engage in the provision of these services after the exclusivity expires may apply for Commission authorization, without regard to the nature of the technology to be utilized, including fixed wireline, WLL, or Internet Protocol. Services may be provided over facilities-based networks, or via resale of other network services, or a combination of both. The Commission shall issue licenses to

provide such services to all qualified applicants, subject to such reasonable regulatory requirements as may be necessary to ensure fair competition and the availability and equitable use of scarce resources.

To ensure that these markets are effectively and rapidly opened to new entry, the Commission shall initiate the process of inviting license applications immediately upon the adoption of this Policy. This will allow new service providers to begin constructing facilities, establishing business relationships, and preparing to market their services, so that they can be fully operational as of the official date of the market opening. Service providers seeking to offer public access services on a resale basis, by means of public pay phones, telecenters, and similar arrangements, will be allowed to enter this market with a minimum of restrictions and regulatory requirements.

For services that depend upon the assignment of radio frequencies, including mobile telephone services, paging and trunking services, and fixed WLL services, the Commission shall examine the potential to issue new licenses utilizing available frequencies in each area. This process must follow the Commission’s complete review of spectrum use in Sri Lanka. Where adequate spectrum is available, the Commission shall invite applications to utilize this spectrum by existing or new operators, with the goal of maximizing competition and development. By the end of 2001, the Commission shall evaluate and conduct public consultations on the desirability and feasibility of introducing Third Generation (UMTS) mobile services in Sri Lanka. Subject to its findings, the Commission shall then initiate a process designed to award new licenses and frequency assignments. This process shall be open, fair, and transparent, and the associated license fees shall not burden the development of new services in this sector.

Dedicated transmission networks. The Commission shall take immediate steps to remove entry barriers and restrictions on the provision of dedicated telecommunications networks and services, for both wholesale and retail customers. These include backbone transmission capacity, two-way leased circuits for closed user group voice and data transmission, one-way distribution networks for cable television or other services, and access to the Internet and Internet-based services. Companies wishing to provide any or all of these networks and services will be encouraged to enter these markets with a minimum of regulatory burdens. The Commission shall issue class licenses for these

types of networks and services, and shall not unreasonably restrict their availability, subject to requirements that companies proposing to construct new facilities-based networks must conform to obligations for shared access to rights of way and support structures.

Licensing

In order to encourage maximum participation in the sector, the Commission’s authorization regime will be simple, open, non-discriminatory, transparent and light handed. There will be two types of authorizations to provide telecommunication services and to establish and operate telecommunications networks:

(1) general authorizations or class licenses for networks and services which do not require access to scarce resources and which carry a limited number of rights or obligations

(2) individual licenses for networks and services which require access to scarce resources and which have more comprehensive rights and obligations attached to them.

There will generally be no limitation on the number of licenses issued except in the case where the use of scarce resources such as frequencies is associated with the license.

Conditions attached to licenses and authorizations may include the following:

requirements related to the effective and efficient use of scarce resources such as radio frequencies, numbers and rights-of-way

universal service obligations

obligations related to interconnection of networks and interoperability of services

obligation to provide leased lines

obligation to maintain network integrity, interoperability of services, data protection, and avoidance of harmful interference

obligation to provide certain information to the regulator for regulatory and statistical purposes

measures to prevent anti-competitive behavior

obligations related to consumer protection (such as billing, disputes settlement,change of access, tariffs, and other conditions)

obligations to provide customer data base information for a universal directory

provision of emergency services

special arrangements for disabled persons

Where licenses are required, the Commission may establish license fees that are reasonable in relation to the cost of administration and regulation of the licensed services, and to the value of the license in the market. All fees will be published. The Commission shall not impose unreasonably high license fees that may deter market entry or limit operators’ ability to invest in the rapid development of services. To ensure fair treatment of companies that have already paid high license fees relative to new entrants that may pay much lower fees, the Commission may establish interim measures that provide temporary benefits or advantages to existing license holders, but only to the extent of compensating for the differential cost of market entry due to the license fees. For this purpose, the Commission shall consider the competitive advantage of earlier entry as a condition of potential compensation.

Competition Policy and Enforcement

A comprehensive framework for ensuring fair competition is critical to effective market development, and the cornerstone of this Policy. This framework consists of all the policies, procedures, regulations, rules, and the necessary administrative structure related to the nondiscriminatory allocation and administration of scarce resources, licensing, interconnection, equal access, dispute resolution, and access to information.

Interconnection. Companies licensed to operate public telecommunications networks and to provide public telecommunication services will be obligated to provide interconnection for purposes of transmitting traffic between subscribers of different networks. The TRC will establish and administer an interconnection regime, which will be non-discriminatory and transparent , and will promote fair and effective competition for all operators. Operators will be free to negotiate interconnection agreements among themselves on such terms and conditions as they may choose. The Commission will facilitate such negotiations, and will encourage operators to achieve agreement in a timely manner.

In cases where parties are unable to come to a satisfactory agreement, the TRC shall intervene to determine interconnection terms, either through mediation or specific interconnection rulings. TRC will establish general terms, conditions, and methodologies that it will apply in reviewing interconnection proposals, including the basis for determining interconnection charges. Such charges must be cost-oriented, and based upon the unbundled costs of network elements required for interconnection.

Operators in dominant market positions, including SLT, will be required to publish a catalogue or Reference Interconnection Offer, indicating all conditions (price, technical, administrative, etc) of interconnection of their networks, which will be available to all potential interconnecting operators. Similarly situated operators will be provided interconnection on the same terms and conditions. This Reference Interconnection Offer must be approved by TRC, subject to review of its provisions.

Equal Access. To the greatest extent possible, customers shall be afforded equal access to all competing service providers in a market, meaning that any customer should have the opportunity to choose among the services of all competing providers, without cost penalties or unduly burdensome technical barriers. Operators of dominant or bottleneck networks will be required to facilitate such equal access by any technical modifications that may be necessary. The costs of providing equal access will be shared on a nondiscriminatory basis by all competitors.

Dispute resolution. Within the TRC there will be established a capacity to resolve disputes between and among competing operators in all matters, especially those related to negotiation of terconnection arrangements. All rulings on competitive disputes will be transparent and non-discriminatory, and will be resolved in the shortest time possible.

The Commission’s rulings will have the force of law, and will be implemented immediately upon the effective date of a decision. If rulings are appealed either within the Commission or in the Courts, the rulings will remain in force unless and until they are altered or overturned. Notwithstanding this provision, the Courts will retain the authority to issue stays of effectiveness upon legal showings of potential harm, or other basis, as under standard law.

Universal Access Policy

This section establishes the principles and requirements for a national policy on universal access to information and communications services throughout Sri Lanka.

Universal Access to Information and Communications

The Government considers that it is a fundamental right of all citizens to have access to diverse and unrestricted sources of information and means of communication. The Sri Lanka Information Infrastructure will not be complete until it reaches all locations and people throughout the country, and provides reasonable and affordable access to the full range of traditional and emerging information and communications services. These include conventional voice telephone service, the Internet, electronic mail, and text message services, among others. Access to these services must also take account of different needs among the user population, including considerations of gender, age, ethnic and linguistic distinctions, and handicaps. To the greatest extent possible, access should be available at high transmission speeds, utilizing state-of-the-art technologies.

The Commission shall develop specific indicators of ICT access, consistent with international experience and precedent in this area, and shall identify appropriate targets for moving toward universal access nationwide within a reasonable time frame. It shall periodically evaluate the progress of the industry toward achieving these targets, and shall adopt such policies and mechanisms as may be necessary to ensure their achievement. In particular, the provisions of the following sections will be implemented as a foundation of Universal Access policy.

Obligations and Responsibilities of Licensed Operators

Every telecommunications operator or service provider that obtains a license or authorization from the TRC will be obligated to contribute to the achievement of national Universal Access objectives as a condition of that license or authorization. (In the case of existing license holders, any new conditions shall be subject to negotiation.) The nature and the degree of each operator’s obligations may vary, except that competing operators in the same market may not be subject to different levels of obligations to support Universal Access that would result in discriminatory treatment of one operator versus another. Network operators will be obligated to interconnect their networks with any service provider that establishes service in areas served by those operator networks, and shall not impose

discriminatory of unduly burdensome terms and conditions for such interconnection.

All telecommunications operators and service providers will also be obligated to participate in the establishment of a national Disaster and Emergency Service telephone system. The Commission shall facilitate the planning and implementation of this system, in coordination with both fixed line and mobile service operators, as well as pay phone providers, and national emergency and security agencies, with a target for implementation nationwide by the end of 2001.

Telecommunications Development Fund (TDF)

A Telecommunications Development Fund (TDF) will be established to help support the rapid development of universal access in areas that are inadequately served by present operator networks, and that may be perceived as uneconomic by the market. This Fund will be administered by the Commission, and will be separately identified under the Commission’s operating budget. The amounts and uses of the fund will be made public, and subject to independent audit. The precise form and working of the Fund will be determined by the Commission, following consultations with the Government, the public, and the ICT industry. The operation of the Fund will be governed by the following principles and objectives:

(a) Contributions to Fund, or In-Kind Investments. All licensed and authorized telecommunications operators and service providers will be required to contribute to the development of Universal Access either through financial contribution to the TDF, or through direct investment and construction of facilities in designated under-served areas (In-Kind contribution), or both. The specific options and scope of contributions required from each operator will be defined in its license or authorization, subject to the requirement of non-discrimination among competing operators in the same market.

Operator contributions to the Fund shall, at least initially, be derived from existing license fees and cess payments. Contributions to the Fund and support for universal access may be augmented by other contributions from within or outside the country.

In those instances where operators or service providers elect to contribute In-Kind facilities, the economic value of such contributions must be equal to the value of funding contributions required of competing operators. The nature, location, and scope of such In-Kind investments must be equivalent to those undertaken through the use of TDF funds.

(b) Use of Funds. All funds collected by the TDF will be allocated to assist in the rapid development of information and communication infrastructure and services in areas that are inadequately served by present operator networks and services. No TDF funds will be utilized to support investments that would otherwise be made by private operators on purely commercial terms, nor shall funds be utilized to the competitive advantage or disadvantage of any operator.

The Commission shall establish specific procedures for identifying qualified locations, and for inviting competing proposals from operators to utilize TDF funds in support of investments in those areas. Applications for TDF funds will not necessarily be limited to existing licensed operators: the Commission shall expressly encourage local entrepreneurs in under-served areas to participate in the

establishment of needed telecommunications facilities by means of the TDF. The Commission will establish a committee of operators, service providers, users, and government officials to advise it on the most effective use and operation of the Fund.

TDF Funds may also be utilized to support providing telephone access to rural post offices, and the provision of telegram services, or equivalent text messaging services. The Commission shall review these services, and establish a policy to promote access to low cost text-based message services in all official languages.

(c) Principle of market-orientation. To the greatest extent possible, TDF funds will be employed to facilitate investment in market-oriented, sustainable operations, which will not require public subsidy following initial start-up funding. In administering the Fund, the Commission shall give precedence to proposals that are based upon sound business case analysis of costs and demand for

telecommunications services. Notwithstanding this requirement, the Fund will be utilized to support the most beneficial investments and services in locations most in need of communications infrastructure. Use of the Fund will also be coordinated with other public service projects, such as educational and health facilities.

Multi-purpose Community Telecenters

The Commission shall encourage and support the establishment of Multi-Purpose Community Telecenters (MCTs) in rural areas of the country, as an initial means of providing universal access to information and communication services in these areas. Use of TDF Funds, as well as other policies, incentives, and operator obligations, will give priority to supporting projects that create

community-based MCTs and similar multi-purpose facilities. Existing commercial bureaus may also apply to be recognized as MCTs under this Policy. Also, rural post offices may be appropriate locations to establish telecenters.

Where such MCTs are proposed, the Commission may issue specific authorizations for their operation, may assign frequencies as necessary, and may regulate MCT service quality, availability, and tariffs. However, the Commission may forebear from MCT regulation in areas where similar services are available on a competitive basis, or otherwise where it deems that regulatory intervention is not necessary to promote the public interest. The Commission shall also ensure, through its tariff regulation policies, that national network operators, including leased line and satellite service

providers, shall provide access capacity to MCTs, and will charge access tariffs that are reasonable and affordable for the MCT operators, and that the network access services are of sufficient quality and capacity to allow the MCTs to provide effective voice and data services to community users. Where MCTs construct their own local network capacity, the Commission’s interconnection regulations shall apply to interconnection between these networks and adjacent, backbone networks. The Commission shall also encourage the coordination of MCT services with the needs and services of other public institutions in the community, including schools, libraries, hospitals, health clinics, emergency and security organizations, and other government offices.

Tariff Regulation and Consumer Protection

This section describes policy and regulatory responsibilities of the Commission in the areas of tariff regulation and general consumer protection for telecommunications customers.

Tariff Regulation

The Commission will be responsible for regulation of the tariffs of services provided by dominant or monopoly telecommunications operators, where market forces are insufficient to constrain service pricing. The Commission’s tariff regulation practices will aim to establish cost-based prices for all regulated services. Where current tariffs are significantly out of balance with respect to costs, the Commission shall promote the rapid rebalancing of such tariffs. The Commission shall also ensure that

operators’ tariffs do not lead to anticompetitive cross-subsidy of competitive services by monopoly or dominant operators.

Tariffs in market segments where there is, in the Commission’s determination, effective market competition (i.e., no carrier possesses significant market power under the Commission’s definition) will be deregulated, and subject only to informational filings and requirements for adequate customer notice of tariff changes and other consumer protection provisions. Under this Policy, there is a presumption that effective competition exists in the market for cellular mobile services and Internet access services, and accordingly the Commission shall move immediately to deregulate the tariffs for these market segments upon proper legislative authorization.

With regard to other market segments, the Commission shall conduct a public proceeding where it has reason to believe that sufficient workable and effective competition exists for a specific service, or service component. The Commission shall establish a formal set of standards for determining the existence of effective competition, which shall be defined as a market segment in which no single operator holds sufficient market power to control market prices, or otherwise to forestall or inhibit price and service competition. At the conclusion of such open proceeding, the commission shall publish a formal forbearance decision that includes specific criteria that justify the finding of effective competition. At any point, any interested party may petition the Commission for econsideration by means of a written petition that provides substantive evidence that the stated criteria are no longer satisfied. The Commission shall consider all such petitions and, where it deems a reasonable case to have been made, it shall hold a public proceeding to determine the continuation of the original forbearance order.

Tariff determinations must take account of the interests of consumers of services, especially those with lower incomes. In the interests of Universal Access objectives, the Commission shall consider such measures – including targeted discounts – that may ensure that basic telephone and information services are reasonably affordable to all citizens.

Quality of Service

The Commission shall ensure that the telecommunications services of licensed operators are of adequate quality to meet the needs of users, and shall establish standards and regulations to monitor service quality. Licensed and authorized network operators will be required to submit periodic reports on their performance according to Commission determined standards, and the Commission will be

empowered to verify these reports through independent investigation.

Technical standards to be covered by service quality provisions will include the bandwidth and signal quality of transmission networks

The Commission shall also establish policies to require that operators and service providers respond appropriately to customer complaints and inquiries, and provide reasonable and convenient access to customer service representatives. Notwithstanding these provisions, this Policy recognizes that the best regulator of service quality, as with tariffs and other factors, is a fully competitive market for telecommunications services. Accordingly, the Commission shall ensure that its quality of service regulations will not unduly impede the growth of the industry nor impose unnecessary burdens upon operators and service providers. There will be no blanket restrictions on the types of equipment or technology employed in operator networks, including the option to utilize refurbished equipment, so long as such equipment provides adequate service quality, and end users are given a choice to select terminal equipment to match their needs and budgets. The Commission shall also ensure that type approval of equipment is provided quickly and without unreasonable restrictions.

Fraud Prevention, Privacy Protection

The TRC is responsible for protecting consumers of telecommunications services from unfair and deceptive marketing practices, and from unwarranted use of private customer information. The Commission shall establish regulations for monitoring and preventing such behavior, including such for operators who violate these standards as the legislature may authorize. The Commission shall establish formal complaint review procedures, and shall require all licensed and authorized

telecommunications operators and service providers to establish their own procedures for responding to customer complaints. The Commission shall also implement a public awareness campaign to inform customers of their rights and options, and to publicize the Commission’s activities and invite public participation.

International Relations and Trade

Development of the Information and Communications Technology sector cannot be disassociated from Sri Lanka’s international relations and trade policies. This development depends, first, on foreign investment that must be attracted to Sri Lanka and, second, on a healthy export market for the services produced by this and other dependent sectors. Also, Sri Lanka has always been an active participant in the world community on a global and regional level.

The Information and Communications Technology sector must ensure that Sri Lanka’s international relations and trade links are maintained and strengthened. The Board of Investment, which is responsible for promoting investment opportunities, will consult with the Ministry of

Telecommunications and Posts, the Telecommunications Regulatory Commission, other Government departments involved in the sector, to support expansion of foreign investments in Sri Lanka’s

telecommunications industry, as well as the export potential of the Sri Lanka ICT sector.

The Ministry of Posts and Telecommunication will coordinate and be responsible for Sri Lanka’s participation in international organizations in matters related to Information and Communications Technology

The maximum possible level of transparency will prevail in Sri Lanka’s dealings with these international organizations. Where permissible the private sector and individuals will be invited to participate in the activities of these organization as part of the Sri Lanka delegation. Where resources are made available to the Government through bilateral or multilateral assistance to support human resources development or similar programs, these resources shall be allocated, under the supervision of the TRC, to licensed operators and other public and private organizations on a non-discriminatory basis. The Government shall also ensure that all operators have equal and non-discriminatory access to capital.

The Ministry of Posts and Telecommunication with the help of the TRC, the BOI, and the private sector will be responsible for promoting Sri Lanka’s capabilities in the ICT sector by means of market promotion opportunities that these and other organizations provide. These entities will also be responsible for publicizing Sri Lanka’s ICT achievements through all media including the Internet.

The Ministry of Posts and Telecommunication and the TRC will also ensure that sector related commitments of Sri Lanka to the WTO and similar organizations are fully implemented.

Telecommunications Regulatory Commission of Sri Lanka,2002