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1. Commercial Proposal for

Omantel’s response on the TRA consultation regarding access and interconnection regulation

Dated: 08 June 2014

Response to public consultation on draft access and interconnection regulation

Page 2 of 56

1 Executive summary ........................................................................................... 3

2 Current state of the access and interconnection market in Oman............ 11

3 Regulatory uncertainty hampering future market development ................ 14

4 Overall response on the approach of the draft regulation ......................... 16

5 Response to consultation questions............................................................. 22

5.1 Question 1 – Assessment of the existing A&I services in the market ....................... 22

5.2 Question 2 – Objectives to consider in developing the new regulation .................... 24

5.3 Question 3 – Structure and approach of the A&I Regulation ..................................... 24

5.4 Question 4 – Nature of obligations in Parts B, C, D and E of the I&A Regulation ........................................................................................................................ 27

5.5 Question 5 – Content and process for development and review of reference offers ................................................................................................................ 30

5.6 Question 6 – Service Annex on fixed interconnection services................................. 33

5.7 Question 7 – Service Annex on mobile interconnection services ............................. 37

5.8 Question 8 – Service Annex on fixed access services ................................................ 39

5.8.1 Market 12: Wholesale network infrastructure access at a fixed location ................... 39

5.8.2 Market 13: Wholesale broadband access at a fixed location .................................... 41

5.8.3 Market 14: Wholesale terminating segments of leased lines .................................... 46

5.8.4 Market 15: Wholesale trunk segments of leased lines .............................................. 48

5.8.5 Market 16: Wholesale IP international bandwidth capacity ....................................... 48

5.9 Question 9 – Service Annex on national roaming services ........................................ 51

5.10 Question 10 – Service Annex on MVNO access services ........................................... 52

5.11 Question 11 – Dispute resolution procedures .............................................................. 53


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1 Executive summary

It is our pleasure to engage with the Telecommunications Regulatory Authority (‘TRA’ or the ‘Authority’) and with industry in reviewing this consultation regarding the draft ‘Access and Interconnection regulation’. Omantel is supporting the TRA in further enhancing the wholesale and retail competitive environment in a manner that ultimately benefits the consumers, the

Omani society overall, and supports in achieving the TRAs regulatory objectives. In this regard, Omantel notes that the wholesale market is already a competitive one with a high degree of infrastructure collaboration among the different operators and resellers.

Omantel is committed to the constructive advancement of the telecom market in Oman and the welfare of its consumers. We look forward to continuing our role as a constructive contributor in the Omani telecom sector.

Our position in contributing in this consultation is to provide practical views and recommendations centered on the progressive interests of the sector and of Oman.

Our response includes three sections, a cover letter, an executive summary, and our overall response on the consultation in detail. These three sections form an integral part of our response on the subject matter.

Omantel agrees with the Authority on the need for a well-functioning wholesale market, as a means for further enhancing competition at the retail level. Our collaboration with Nawras was critical to allow for the development of a strong second player in the market, and this collaboration has continued on since then through commercial agreements of mutual benefit on all aspects of the wholesale business. Additionally, our incubation and support for mobile resellers is well evidenced by their proportionate market share contribution which currently exceeds 10%, and is also well recognized globally as Omantel was selected among the top three wholesale providers at the MVNO World Congress in 2014. We are keen to continue working with the Authority on this important topic towards reaching new heights for the Omani telecom industry.

We have reviewed the consultation documents in light of the other TRA regulations and decisions being enacted and the current state of the telecom market. We have further evaluated the potential effects of the proposed regulation by taking account of the implications on economic viability, impact on stakeholders, international benchmarks and best practices.

After careful review and analysis, Omantel is of the strong belief that the proposals in the draft regulation go well beyond what has been tried and tested elsewhere in the world globally and regionally, both in the number of markets regulated and in the choice of price regulation method, and are unlikely to help achieve the Authority’s objectives on promoting facilities-based competition, which in turn constitutes the backbone for national economic growth across all sectors.

More specifically, we note the following concerns.

A. The cost-based pricing of most wholesale services will diminish investment in the sector

Cost-based pricing is a suitable approach for pricing mature services where the need for new investment is limited, such as local loop unbundling. However, the approach is not suitable for


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stimulating much-needed investment in the industry. Key areas that may be affected are likely to be the investments in fixed broadband rollout as well as international capacity. Even the most mature regulators (such as Ofcom in the UK) have maintained more flexible pricing policies in services where the investor faces a high level of uncertainty, as in the case of Next-Generation Access (NGA) networks.

As such, we note that this regulation is not in line with achieving the TRA or the Omani National Policy Objectives on investment in the telecom sector. Omantel would like the TRA to note that our investment plans for our national and international network rollouts and for our vision for positioning Oman as an international telecommunication hub for the region would be at risk and may be put on hold as a result of limiting or eliminating the investment incentives, in case the Authority proceeds with the regulation in its current form.

B. The regulation is largely unprecedented in other parts of the world

We conducted an international benchmarking exercise (refer to figure 1.1 below) on the wholesale regulation in other markets. It is evident from the results that most regulators focus on achieving cost orientation in 6 or 7 markets, out of the 16 markets analyzed, with the remaining markets either regulated with no price control, or not regulated at all. By contrast, the proposed regulation in Oman aims to achieve cost orientation for 15 out of the 16 markets benchmarked.

If we look at our neighbouring countries, which share similar socio-economic norms, they are only regulating a few of these markets based on LRIC or similar cost approaches, with the remaining ones being regulated on commercial agreement or not at all. In Europe, where highly mature telecom markets exist, generally an average of only seven of the sixteen wholesale markets are being regulated. The huge consolidation of operators in Europe is evidence that there is limited or no incentive for any of the operators to invest in their concerned markets, which is a situation that should be avoided in Oman.

The TRA’s proposed regulation appears to be unprecedented on two levels: 1) the number of markets regulated, and 2) the fact that a strict cost based approach is suggested for the pricing of all services concerned. In short, the proposed regulation on access and interconnection would appear to go beyond what is tried and tested both regionally and globally.

Investment decisions are made by individuals, institutions and corporations according to their own interests, but these interests are influenced by policies which govern the relative costs and benefits of investing in particular areas. In other words, appropriate policies are fundamental in encouraging investment in areas of national interest.

Therefore, Omantel strongly believes that in order to maintain conducive environment for continued investment in the telecom sector in the Sultanate, many of the markets in the table below should be left for commercial agreements between the operators, or in some cases remain unregulated. Failure to do so would likely lead to substantial market value destruction and the high risk of a major decline of further investment in the sector.

C. The proposed regulation is unlikely to yield long term net benefits for end users

An open-access approach based on cost orientation will not necessarily have a positive impact on the consumer, as the service will be provisioned over the existing network with no network and service differentiation. Taking bitstream services as an example, a cost orientation approach will promote the introduction of service-based resellers using the same network as Omantel. This may


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have a positive implication in the short term, as operators further fill up their networks with more traffic, and as end users have more options to choose from (albeit with limited differentiation).

However, the long-term consequences are likely to be detrimental for the telecom industry and for the global competitiveness of Oman. Service-based competition on a cost orientation basis will lead to a shift in revenues from operators that invest in the network, to resellers that do not invest, and this would likely lead to diminishing the ability of operators to invest in new infrastructure. Consequently, the service levels will decline in the long term with the network assets becoming out of date.

Furthermore, Omantel has been investing in upgrading its fixed network, allowing it to provide highest quality and enhanced speed in multiple folds at no additional cost to customer. This would not have been possible in the presence of cost-oriented service-based competition, as proposed in the regulation.

D. The proposed regulation creates uncertainty

Omantel believes that it is important to share our concern regarding the mixed signals that the TRA is sending to the market and to investors. This is evidenced by the launch of several regulatory initiatives, which are yet unsettled, in addition to the proposed regulation, such as:

Licensing Framework

Telecom Act review

BU LRIC

National Broadband Strategy (Oman Broadband Company)

These initiatives are interlinked, whereby the outcome of one initiative would likely influence the outcome of the others. Consequently the relative timing of the introduction of these initiatives needs to be considered in order to avoid the undesirable consequence of increased regulatory uncertainty.

To further clarify, the proposed access and interconnection regulation is proposing to regulate call origination for ‘full MVNOs’ on a cost basis. Omantel notes that there is no such entity as a ‘full MVNO’ under the current licensing framework, which only refers to resellers. As such, the proposed regulation is attempting to regulate a license category that does not exist. A more logical order for defining regulation would be to enact the revised Telecom Act, issue the new licensing framework that would define the rights and obligations of a ‘full MVNO’, and only then attempt to regulate the access prices for ‘full MVNOs’. The same applies to the ‘light MVNOs’ mentioned in this document.

Additionally, we note that further clarity is required on the role and obligations of the Oman Broadband Company (OBC), as the proposed regulation may be structured differently depending on the outcome. A case, where OBC has a limited fiber rollout mandate that would be supplemented by operators, would require a restructuring of the proposed regulation to be more conducive to fiber investments.


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E. The proposed regulation risks destruction of value in the mobile market

Since 1996, Omantel has invested heavily in the mobile market and continues to invest to provide the best and latest technologies. In addition, and in compliance with the TRA requirements to enable the mobile resale business in Oman, Omantel has partnered with two mobile resellers (Friendi and Renna), which have delivered effective competition in the mobile market. We find it difficult to comment on regulation without knowing the details of obligation rights, services, and scope of licensed services, which are yet to be defined in the new licensing framework.

The introduction of cost-oriented call origination for “full MVNOs” – as referred to in the Consultation Document - is a rare and largely an untested practice, which will likely lead to substantial market value destruction. The availability of cost-oriented access for MVNOs risks generating unintended consequences on competition. It could in fact discourage new investments in infrastructure by network operators (for example, in rural/high cost areas) and would create an incentive for candidate MVNOs to enter the market only for a short period of time, which we believe, is not the goal here. In other words, a cost-oriented access obligation could provide MVNOs with a clear incentive to generate high margins as opposed to investing in the country for the provision of telecom services in a ‘high value’ model (i.e. offering a better value to end users by means of new services, better content, etc.). This would likely lead to irreversible market damage, whose burden will be borne by the facility-based operators.

Within this context, we note that the example of Omantel’s mobile resellers (Friendi and Renna) proves that commercial agreements have been instrumental in making this model a success in Oman.

Conclusions and recommendations

Omantel is aligned with the Authority on the need to regulate certain wholesale fixed interconnection and wholesale fixed access services. However, the proposed legislation would appear to go far beyond internationally recognized best demonstrated practices. As can be seen from an overview on international practices, in no nation has access and interconnection regulation been imposed to the level proposed. Furthermore, the TRA proposes a blanket LRIC cost approach as the means to regulate all markets in question. Again, this does not adhere either to regional nor global best demonstrated practice on how markets should be regulated.

It is therefore Omantel’s view that the proposed regulation is far more extensive and intrusive than what is called for, and runs contrary to global and regional best demonstrated practice both in terms of the extent of regulation, and the proposed means of regulation as it does not cater for the progressive maturity of the sector in order to achieve objectives such as enhancement of sector infrastructure, encouragement of investment in infrastructure and a balanced quality/price for end-users.

Omantel had objections to the 2013 MDD particularly relating to definition of the markets, and the designation of dominance in certain markets, as outlined in our response to the consultation on ‘Market Definitions, Dominance, and related regulation’ in November 2012. Our concerns were not fully reflected in the final report issued by the Authority.

The widely accepted best practice on regulating significant market power (SMP) is to propose remedies that are based on the nature of the problem identified, and proportionate to ensure the issue is sufficiently addressed. Regulation is deemed as proportionate ‘where it represents the


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minimum necessary intervention required to achieve a particular aim’1, that is the remedy

imposed must be both necessary and the minimum necessary to address the problem.

Omantel believes the proposed regulation goes significantly beyond what can be considered as a ‘proportionate’ response to the challenges facing the market. In addition, mandating cost-orientation to all services, even in markets where no specific problems have been identified would impose a substantial regulatory burden, and hamper infrastructure investments, all to the detriment of the target policy objectives.

It is thus our belief that the proposed regulation, in its current form, should be revised and consulted upon with the stakeholders and interested parties following due process, in favor of a more rational approach that would be more conducive to further infrastructure investments and also service-based competition, as per the suggestions outlined in this response to the TRA’s consultation.

Therefore, and in consideration of:

Preserving National Economy interests;

Avoidance of value destruction of the telecom sector;

Evolving sector maturity;

Promotion of pro-investment policies;

Proportionate regulatory approach;

Best regional and international practices; and

Creating value with Speed and Quality for end-users

Omantel urges the TRA to:

1. Postpone the proposed process and any subsequent requirements in this matter, pending the completion of outstanding regulatory initiatives listed previously;

2. In all cases, Omantel recommends that the TRA continues to follow a gradual approach in regulating the wholesale markets, carefully choosing means of regulation to ensure that the collective sector objectives are achieved.

1 http://ec.europa.eu/competition/publications/cpn/2007_1_49.pdf

http://ec.europa.eu/competition/publications/cpn/2007_1_49.pdf


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The proposed regulation on access and interconnection would appear to go beyond what is tried and tested both regionally and globally

Figure 1.1: Benchmarks of global access and interconnection regulation [Source: Analysys Mason, 2014]

HK KSA Qatar USA Bahrain Norway Malaysia UAE Ireland Poland France UK Spain Singapore Italy Oman1

Fixed origination CA R P P P P P P P P P P P P

Fixed termination CA R R P P P P P P P P P P P P P

Mobile termination CA R R P P P P P P P P P P P P P

LLU/line sharing CA CA P P CA P P P P P P P P

Terminating segments on

leased linesCA P P P P P P P P P P

Duct access CA CA CA CA P P P P P P4

P P P4

P

Mobile origination CA P P P

Wholesale line rental RM CA P P P P P P P

Bitstream CA P3 CA P P P

5P P

2P

6P P

Fixed call transit CA CA P P P P

Landing stations CA CA P P7

P

Dark fibre CA CA CA CA P P P4

P

Trunk segments on

leased linesCA P P P

Wholesale IP international

capacityCA P

National roaming CA CA CA CA RM

MVNO access CA CA P

Number of cost based

regulated services0 0 0 3 4 7 7 8 8 8 8 8 8 9 10 15

Co

mm

on

ly

reg

ula

ted

serv

ices

Co

un

try

sp

ecif

ic

reg

ula

tio

n

Mo

stl

y

un

reg

ula

ted

serv

ices

P= Regulated based on cost orientation R = Regulated price defined by NRA RM = Regulated based on retail minus CA = Regulated service but no price control (Commercially agreed prices) Blank field = no regulation

(1) Oman proposed regulation

(2) UK performs bitstream regulation for rural copper only

(3) Norway performs bitstream regulation for copper only

(4) Applicable for incumbent NGA network only

(5) Poland bitstream is only mandated in certain geographies

(6) Spain bitstream is only regulated for certain speeds

(7) Singapore regulated Access to Landing Stations is mandated by geographical constraints


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Figure 1.2: Summary of Omantel’s suggestions on the regulation of access and interconnection [Source: Omantel, 2014]

Annex Service Draft A&I regulation

(regulation/pricing)

Omantel

position

Omantel’s suggested

change


1 Call origination – carrier pre-

selection

Regulated service / FL LRIC Not

accepted

The pricing approach

must allow for full cost

recovery

1 Call origination – call by call

selection


accepted



recovery

1 Call origination for non-

geographic calls


accepted



recovery

1 Call origination – prepaid calling

cards


accepted



recovery

1 Outgoing international calls Regulated service / FL LRIC Not

accepted

Not regulated /

commercial agreements

1 Outgoing aeronautical and

maritime calls

Regulated service / FL LRIC Accepted --

1 Calls to emergency services Regulated service / FL LRIC Accepted --

1 Calls to directory enquiry services Regulated service / FL LRIC Not

accepted

Service to be removed –

Call conveyance to be

regulated under call

origination, and provision

of directory service

should not be regulated

1 Prepaid calling card access type 1 Regulated service / FL LRIC Accepted --

1 Prepaid calling card access type 2 Regulated service / FL LRIC Accepted --

1 Call termination Regulated service / FL LRIC Accepted --

1 Incoming international calls Regulated service / FL LRIC Not

accepted

Not regulated /


1 Call transit Regulated service / FL LRIC Accepted --

1 IP interconnect Regulated service / FL LRIC Not

accepted

Not regulated /


2 Mobile call termination Regulated service / FL LRIC Accepted –

2 Mobile call origination Regulated service / FL LRIC Not

accepted

Not regulated /


3 Local loop unbundling (LLU) Regulated service / FL LRIC Accepted –

3 Local loop unbundling (line

sharing)

Regulated service / FL LRIC Accepted –

3 Co-location Regulated service / FL LRIC Not

accepted

Regulation should only

apply to LLU co-location


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Annex Service Draft A&I regulation


Omantel

position


change


3 Dark fiber Regulated service / FL LRIC Not

accepted

Not regulated /


3 Duct access Regulated service / FL LRIC Not

accepted

Not regulated /


3 Wholesale line rental Regulated service / FL LRIC Accepted –

3 Bitstream layer 2 Regulated service / FL LRIC Not

accepted

Regulated service / retail

minus

3 Bitstream layer 3 Regulated service / FL LRIC Not

accepted

Regulated service / retail

minus

3 Wholesale transmission Regulated service / FL LRIC Not

accepted

Service to be removed –

this is already covered

under market 14 and 15

3 Broadband resale service Regulated service / Retail

minus

Accepted –

3 Wholesale terminating segments

of leased lines


accepted

Regulated service only

up to 155 Mbps/ FL LRIC

3 Wholesale trunk segments of

leased lines


accepted

Not regulated /


3 Wholesale IP international

bandwidth capacity


accepted

Regulated service /


3 Access to landing stations Regulated service / FL LRIC Not

accepted

Not regulated /


3 Access to earth stations Regulated service / FL LRIC Not

accepted

Not regulated /


4 National roaming Regulated service / retail

minus

Not

accepted

Regulated service /


5 MVNO access Regulated service / FL LRIC Not

accepted

Not regulated /



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2 Current state of the access and interconnection market in Oman

Omantel appreciates the positive development of the telecom sector in Oman that, under the patronage of the Authority, has resulted from the introduction of competition. Omantel believes that the realized benefits for consumers is a result of the fact that telecom licensees, in particular Omantel and Nawras have successfully driven the penetration of fixed and mobile services in Oman while managing the service prices in line with international and regional benchmarks.

Such effects have been realized under the regime of the two main operators competing based on their own infrastructure and investments, where Omantel, as the TRA is aware, is among the highest in the world in regards to reinvesting its revenues in the network.

Omantel achievements in the wholesale market

Omantel has been supportive of the development of the market and the competitive environment since the early days of liberalization. The collaboration with Nawras has proved critical in allowing the development of a strong second player in the market, and this collaboration has continued since then through commercial agreements of mutual benefit. Examples of such collaboration include:

National roaming with Nawras since 2005, currently in the process of further expanding the number of sites

Backbone agreement enabling Nawras to have end-to-end access to backhaul

Mobile In-building Sharing agreement between Nawras and Omantel where we (on reciprocal basis) share mobile antennas indoor to avoid duplicate access networks

Tower sharing and colocation with Nawras on commercial reciprocal terms

Access to international content players hosted with Omantel

Recent submarine cable co-investment with Nawras giving Nawras ample capacity for future needs and access to other submarine cable systems of Omantel on commercially agreed terms

IP peering on commercial terms

Omantel notes that such a high degree of collaboration would not have been possible in a market with excessive regulation, where the regulated prices are not in line with the supply and demand forces in the market.

Omantel also fostered the growth of resellers, to the extent where the reseller market has exceeded the 10% market share, well in line with global benchmarks. The commercial agreement set up with the two mobile resellers Friendi and Renna and the continuous support though various promotions and other stimulation initiatives offered by Omantel allowed them to compete effectively in the market and enabled them to acquire a majority of the reseller market share, at a time when other licensed resellers failed to achieve commercial viability.


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The competitive wholesale market has positively impacted retail services

The developments in the wholesale market have positively impacted the retail markets, as evidenced by the following milestones:

Increase in retail competition on mobile with market shares roughly distributed evenly among the market players.

The emergence of successful resellers that better address the needs of certain customer segments.

Affordable and competitive pricing by regional and international standards, as per the TRA benchmarking report – Oman price consistently ranks below the GCC average for mobile and fixed services (voice and data), and is particularly competitive for mobile broadband where Oman ranks among the cheapest countries in comparison to the OECD.

Omantel further notes the unilateral steps applied in improving affordability and attractiveness of fixed line services, which include further reducing the fixed line tariff by 40% from OMR4.9 to OMR2.9 despite the lack of commercial feasibility and our current initiative of enhancing broadband speeds for all subscribers at no additional cost (e.g. lowest speed offered by Omantel is enhanced to 2Mbps from the earlier lower speeds).

Omantel concern on the TRA statements made in the public consultation

Omantel notes, with concern and surprise, that the Authority portrays the wholesale telecom market of Oman as lacking in competition, despite the on-going collaboration between Omantel and industry players on a wide range of access and interconnection services, and despite a highly successful reseller hosting model.

Omantel is extremely concerned with the one-sided views shown in the draft consultation, as evidenced in item (2.2.1), entitled “Fixed network A&I services offered by Omantel” in which, although the text states that Omantel and Nawras are the main providers of fixed network voice and broadband in the Sultanate, it then talks only about Omantel’s RAIO and no single reference is made to the fixed A&I services of Nawras.

Both Samatel and Nawras were quoted as having concerns about certain transactions with Omantel. Though we believe that the consultation document is not the place to address and discuss such a matter, however, it should be noted that Omantel has never been given the right to comment on these concerns, to refute them, or to highlight its views earlier. These unsubstantiated concerns have incorrectly portrayed Omantel as a hindrance to market entry, which we reject.

In addition, it comes as a surprise to Omantel that the consultation document goes further to indicate a failure of agreement with Nawras for using the following services:

Access to points of presence (PoPs) hosted by Omantel

National peering

IP transit

The statement that “the negotiations on the take-up of these services were not successful, primarily as a result of the inability of the parties to agree on price terms” is simply incorrect. Nawras is in fact consuming all three of these services from Omantel.


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As for the incorrect and vague statements made with relation to challenges facing resellers, Omantel refers the reader to the fact that Omantel was selected among the top three wholesale providers at the MVNO World Congress in Germany in 2014 in acknowledgement of Omantel’s role and contribution to enabling mobile resellers in Oman and facilitating opportunities for them to grow and expand to reach various consumer segments, in contrast to the allegations made in the document. In all cases, the following needs to be noted:

Omantel’s mobile resellers are offering their own value added services (VAS) in addition to reselling Omantel’s VAS.

Hindering the mobile resellers from growing into ‘more fully-fledged MVNOs’ is not an allegation that should be placed on Omantel. It has been the TRA’s decision to limit the scope of mobile resale business in Oman to achieve certain regulatory and competitive objectives. As such, we believe that such objectives have been fully realised. Should the TRA decide to expand the scope of the mobile resale business in Oman, Omantel would be pleased to participate in any efforts to make it, once again, a success story for Oman.

In December 2010, Omantel entered into an agreement with its mobile resellers giving them a generic discount each month in compensation for future Omantel promotions in order to give the mobile resellers the freedom to develop promotions independently of Omantel.

Accordingly, Omantel notes that it has supported the continued development of the wholesale and retail markets in Oman in a manner that promotes free, sustainable, and fair market competition.


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3 Regulatory uncertainty hampering future market development

The TRA has recently signaled the introduction of a broad set of market regulations. Some of these – such as the Market Definition and Dominance (MDD) decision – have been completed and others –such as the New Licensing Framework and the revised Telecom Act – about which there continues to be uncertainty. Regulatory uncertainty lies not only with the outstanding regulations that have not been completed yet but even published regulations/decisions like the MDD have still not taken effect. This is evidenced by the Authority continuing to impose ex-ante regulation on the ‘retail international voice call’ market, despite the regulation not finding any operators dominant in this market.

The set-up of the Oman Broadband Company represents further market and regulatory uncertainty, as the role of the broadband provider, geographical coverage, and speed of rollout have not been clearly defined. Substantial regulatory, technical and market risks still lie ahead in achieving a high degree of national broadband connectivity.

The plethora of regulation that is expected to come into effect is creating regulatory uncertainty that would likely hamper market development and limit investment incentives for existing operators and prospective new entrants. The combination of too many simultaneous changes in regulation has the potential to disrupt an otherwise well-functioning market. In this respect, Omantel favors an incremental and gradual approach whereby the impacts of a new regulation are tested, reviewed and evaluated before proceeding with further regulatory changes.

Omantel notes two particular areas of concern, where the regulatory uncertainty will have a material impact on the market:

1. The proposed Access and Interconnection regulation in its current form would have a substantial impact on the investment plans of facilities-based operators (FBOs), particularly as related to investments in broadband. In the absence of clarity on the future of broadband roll-out in the country, Omantel notes that it would be premature to put in place excessive regulation that may stifle investment in the fixed broadband sector by operators.

2. We also note that MVNO regulation is currently taking place through an illogical sequence of events. The full MVNO licensing framework and license conditions should be

clearly defined and agreed following due consultation with the industry. Once that process is complete and understood, the relevant access and interconnection regulations for ‘full MVNOs’ should be put in place. In the absence of a well-defined licensing framework that specifies the service obligations of full MVNOs, it is not possible to define the best suited access and interconnection obligations.

Omantel recommends that the scope of the current regulation should be reduced until further regulatory certainty is achieved. More specifically, the service annex on ‘fixed wholesale

access services’ and ‘MVNO access’ should be removed from the proposed regulation until further


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regulatory certainty is achieved, and these two service annexes potentially enacted in a future amendment.


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4 Overall response on the approach of the draft regulation

In addition to all of the above, and without prejudice to the observations and views expressed to the regulator through our letter reference Omantel/CEO/1/24/164/2014 dated 14/05/2014 regarding the ‘Public Consultation on Access and Interconnection Regulation’, Omantel hereby provides further elaboration on the points of concern as well as specific answers to the questions raised by the Authority in the consultation document.

This section aims to provide Omantel’s overall comments on the approach used for the draft regulation.

Disproportionate level of regulation

The widely accepted best practice on regulating significant market power (SMP) is to propose remedies that are based on the nature of the problem identified, and proportionate to ensure the issue is sufficiently addressed. Regulation is deemed as proportionate ‘where it represents the minimum necessary intervention required to achieve a particular aim’2, that is the remedy imposed must be both necessary and the minimum necessary to address the problem.

Omantel is concerned that the proposed regulation goes significantly beyond what can be considered as a ‘proportionate’ response to the challenges facing the market. We fear that a blanket approach is being applied, mandating cost-orientation to all services, even in markets where no specific problems have been identified. In taking such an approach, the TRA is creating a regulation that is not in line with international best practice, imposing a substantial regulatory burden, and hampering infrastructure investments, all to the detriment of the target policy objectives.

Unprecedented regulation with unknown implications on the market

The regulation being proposed by the Authority is in its totality unprecedented in any part of the world. We note that the Authority aspires to apply best practice in regulation, and hence we conducted a benchmarking exercise on wholesale regulation for dominant players in different parts of the world. A broad range of countries were selected for the benchmarking exercise. We benchmarked some European markets that are often seen as leaders in terms of telecom regulation, also given that EU telecom regulation was partly followed by the TRA on various occasions.Other markets were benchmarked to ensure the analysis provides a 360 degree picture on the possible spectrum of regulation.

Our analysis of benchmarks highlights three levels of service regulation:

2 http://ec.europa.eu/competition/publications/cpn/2007_1_49.pdf

http://ec.europa.eu/competition/publications/cpn/2007_1_49.pdf


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1. Commonly regulated services – A set of basic access and interconnection services are

commonly regulated based on cost orientation across most benchmarked countries. These are deemed essential for the proper functioning of the retail market. Examples of such services in include call origination on fixed line, call termination, and last mile access (i.e. local loop unbundling, or terminating segments of leased lines)

2. Country-specific regulation – A set of other essential access and interconnection

services is regulated differently depending on the local market context. These are typically regulated with more ‘light-touch’ pricing approaches such as ‘retail minus’ or commercial agreements, with potential ex-post intervention. Examples of services include duct access, mobile call origination, and bitstream.

3. Services where regulation is rarely or never applied –The third category involves a set of services that are never or rarely regulated, and usually left for commercial agreement. These may involve high levels of uncertainty, and thus minimal regulation is applied to stimulate investment. These may also involve markets that are competitive, either through the possibility of developing alternative infrastructure, the availability of other players in the market, or through possible substitution with other services. Examples of services in this category include trunk segments of leased lines, landing stations, and call origination for MVNOs.

Our review of international benchmarks indicates that regulators typically enforce strict price control regulation on a limited set of services where there is a specific need for regulation, and opt for more ‘light-touch’ regulation for the other wholesale markets. Out of 16 benchmarked services, a typical regulator would impose price controls on 6 or 7 services, as seen in the chart below. The most conservative benchmark was Italy, which imposed cost orientation on 10 of the 16 markets.

This is in stark contrast to the Omani proposed regulation, which imposes cost orientation on 15 out of the 16 markets. Based on these facts, Omantel considers the proposed regulation to be excessive and not aligned with international regulatory best practice. Cost orientation based on LRIC is a widely respected approach for certain services, but there is no precedent for a regulator that applies such a price control methodology for all services. There are concerns that such an approach is untested with potential catastrophic implications on the industry and the National Economy, as detailed later in the document.


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The proposed regulation on access and interconnection would appear to go beyond what is tried and tested both regionally and globally

Figure 4.1: Benchmarks of global access and interconnection regulation [Source: Analysys Mason, 2014]

HK KSA Qatar USA Bahrain Norway Malaysia UAE Ireland Poland France UK Spain Singapore Italy Oman1

Fixed origination CA R P P P P P P P P P P P P

Fixed termination CA R R P P P P P P P P P P P P P

Mobile termination CA R R P P P P P P P P P P P P P

LLU/line sharing CA CA P P CA P P P P P P P P

Terminating segments on

leased linesCA P P P P P P P P P P

Duct access CA CA CA CA P P P P P P4

P P P4

P

Mobile origination CA P P P

Wholesale line rental RM CA P P P P P P P

Bitstream CA P3 CA P P P

5P P

2P

6P P

Fixed call transit CA CA P P P P

Landing stations CA CA P P7

P

Dark fibre CA CA CA CA P P P4

P

Trunk segments on

leased linesCA P P P


capacityCA P

National roaming CA CA CA CA RM

MVNO access CA CA P

Number of cost based

regulated services0 0 0 3 4 7 7 8 8 8 8 8 8 9 10 15

Co

mm

on

ly

reg

ula

ted

serv

ices

Co

un

try

sp

ecif

ic

reg

ula

tio

n

Mo

stl

y

un

reg

ula

ted

serv

ices

P= Regulated based on cost orientation R = Regulated price defined by NRA RM = Regulated based on retail minus CA = Regulated service but no price control (Commercially agreed prices) Blank field = no regulation

(1) Oman proposed regulation

(2) UK performs bitstream regulation for rural copper only

(3) Norway performs bitstream regulation for copper only

(4) Applicable for incumbent NGA network only

(5) Poland bitstream is only mandated in certain geographies

(6) Spain bitstream is only regulated for certain speeds

(7) Singapore regulated Access to Landing Stations is mandated by geographical constraints


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The regulation promotes service-based competition at the expense of infrastructure build

Omantel recognizes that the market has achieved a positive evolution under the current market regime, with Omani operators investing 18% of revenues3, which is among the highest levels in the world. The two infrastructure-based operators have made substantial investments in advanced network technologies such as 3G, 4G, NGN, as well as international capacity.

Omantel notes that heavy regulation of wholesale services on a strict cost basis and open access may lead to increased service-based competition. This may have a positive implication in the short term, as facilities based operators (‘FBOs’) provide end users with more options to choose from (albeit with limited network service differentiation).

However, the long-term consequences are likely to be detrimental to the telecom industry and to the global competitiveness of Oman. New infrastructure investments, particularly those relating to new technologies, involve significant risk on demand, price and technology maturity. An open-access model would allow access seekers to commit to a ‘pay-as-you-go’ model, leaving the full investment risk with the FBO. To mitigate this risk, FBOs are likely to delay substantial network investments until the demand materializes and the risk is minimized, which is not an ideal outcome from a regulatory perspective.

In fact, Omantel would like to highlight that wholesale access is only possible today because FBOs have invested in previous network expansions of significant risk. Omani operators deployed 4G services well in advance of many global players, and with much higher levels of coverage, despite uncertainty on the ecosystem and take-up/availability of handsets. Investments in international capacity are another example. This is in stark contrast to an open-access model which would incentivize operators to wait until demand materializes.

In case open access to facilities is required for more wholesale market competition, Omantel believes that a co-investment approach is much more appropriate than an open-access model, and would achieve a more equitable distribution of risks.

Pricing methodologies suggested are not relevant for the proposed services

The draft regulation proposes a long-run incremental cost model (LRIC) for pricing most of the regulated A&I services with few exceptions (broadband resale and national roaming which are priced based on retail minus). Omantel notes that cost orientation based on LRIC is not the most suitable pricing methodology for all regulated services, as some are better served through a cost-plus or retail-minus approach, or through commercial agreements.

More specifically, we note that LRIC should only be applied in those very specific cases where such an intrusive means of price control is needed. Other wholesale services, where there is a strong access obligation but substantial investment risk, may be priced under other forms of cost orientation, such as cost plus. Retail minus may also be applicable for some A&I services, where the access seeker is a reseller with limited or no investment role across the value chain.

3 GSMA Intelligence database


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Figure 4.2: Pricing approaches [Source: Omantel, 2014]

A cost-based approach for call origination to MVNOs will lead to substantial mobile market value destruction

The most notable change in the proposed regulation, and the one with the highest possibility of market value destruction, is the proposal to regulate wholesale mobile origination for MVNOs on a LRIC cost basis.This is a wholly inappropriate intervention in a market where there is competitive supply. Further, the potential unintended consequences of imposing such strict price controls on what will be a new service, is reason enough to take an alternative pricing approach. We also note that MNOs in the market may have different call origination costs based on a possible scale difference, and consequently could have different regulated prices for mobile origination. As a result, MVNOs would likely partner with MNOs that have the largest scale and lowest cost. These MVNOs in turn would aggressively target the retail customers of other MNOs that have a higher cost of origination, leading to negative market implications for the smaller MNOs. In addition, we note that such a pricing approach for MVNOs would incentivize short-term focused price discounting to support customer acquisition by the MVNOs, with little concern for the long term negative effects on market value.

As such, we note that this approach is fundamentally flawed, untested, and likely to lead to substantial market value destruction.

Conclusion and recommendations

Omantel is concerned about the disproportionate nature of the proposed regulation, which aims to regulate a long list of wholesale markets, many of which are currently well functioning and could benefit from only a ‘light touch’ regulatory approach. In its current form, the proposed regulation is expected to have a significant negative impact on investment by infrastructure-based providers, particularly as relating to broadband. In the absence of certainty on the capabilities and strategy of the Oman Broadband Company, Omantel notes that it may be premature to put in place excessive regulation that could stifle investment in the sector. The proposed pricing approach for call origination by MVNOs is of particular concern, as it would incentivize MVNOs towards short term focused price discounting, with negative long term implications on market value. We believe the A&I obligations for full MVNOs should only be defined once the licensing framework is developed and the service obligations are defined.

Long run

incremental cost

(LRIC)Cost plus Retail minus

Commercial

agreements

Ap

plic

ab

ility

Strict cost based

price with a

regulated margin

Cost oriented

pricing with an

additional margin

to compensate for

investment risk

Most relevant for

reseller services

where the access

seeker does not

invest in the

network

Most relevant in

case of a market

with competition

among wholesale

providers

Heavy touch regulation Light touch regulation


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It is thus our recommendation that the proposed regulation should be revised in favor of a more ‘light touch’ approach that would be more conducive to further infrastructure- and service-based competition, as per the suggestions outlined in this response to the TRA’s consultation.


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5 Response to consultation questions

5.1 Question 1 – Assessment of the existing A&I services in the market

Do you agree with the Authority’s assessment of existing A&I services available in the market?

Omantel notes that the current Access and Interconnection regime in the market is functioning well in support of the Authority’s defined objectives, as outlined below:

Fixed infrastructure services

Omantel’s fixed network infrastructure has been a vital support to all players in the industry. We are a key driver for competition in the industry, by setting up the common network infrastructure that is used by all the players in the market. Despite having entered the market close to ten years ago, Nawras continues to leverage Omantel’s infrastructure assets, as the most practical option for achieving some of its connectivity requirements. We further note that the strong uptake of Omantel’s wholesale services by all industry players is a reflection of a well-functioning fixed infrastructure market.

Figure 5.1: Fixed services currently used by market players [Source: Omantel, 2014]

Fixed services currently subscribed to by our industry partners

Point of Interconnection National Leased Lines

Port Capacity Special services

Co-location Services Access services

Basic Fixed Conveyance Services Internet Leased Lines / International leased lines

Implementation of number ranges International Calling Cards Bitstream Service

Interconnection Links IP international bandwidth

Fixed access services

In support of the Authority’s guidelines for increasing competition on fixed line, Omantel launched wholesale services that would allow for more competition on voice and broadband retail services.

On the voice side, we launched call carrier selection, which would allow other licensed operators to offer international calling services to Omantel’s fixed line customers. The service was offered at competitive pricing based on LRIC costs. Despite the competitive pricing, the service witnessed limited uptake by access seekers and retail consumers, reflecting a lack of interest.


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On the broadband side, Omantel offers its ‘broadband resale’ services to resellers on a ‘retail-minus’ basis. This is priced at an attractive level for any retailer that has retail activities at least as efficient as an incumbent operator, but again the service witnessed limited uptake.

The consultation document emphasizes Samatel’s view that the pricing of wholesale broadband should be reduced. Samatel has never requested any fixed broadband services from Omantel, as would be expected if Samatel were seriously interested in launching the service. In this regard we note that it is in Samatel’s interest as a commercial entity to argue for reducing the price of wholesale services, and that such views should not be treated in the consultation document as a market reality or a fact, unless supported by the Authority’s own studies and analysis.

We also note that fixed broadband services are witnessing challenging market dynamics, due to the availability of mobile broadband including 4G services from Omantel and Nawras, potentially impacting the uptake opportunity for resellers.

Mobile infrastructure services

Omantel notes that a current healthy level of collaboration exists in the area of mobile infrastructure sharing, and that has been achieved purely by joint initiatives among the operators and based on commercial agreements. Omantel and Nawras have commercially negotiated agreements including, but not limited to:

National roaming agreements which support Nawras in offering nationwide seamless coverage

Sharing in-building sites

Tower colocation to support both operators in achieving better coverage for their respective mobile service without replicating investment

Backhaul point to point connectivity

Omantel further notes that such a high level of industry cooperation would not have been possible if such services were subject to strict access regulation.

Mobile reseller services

Omantel has been a strong supporter of growth and innovation by mobile resellers, as evidenced by the following:

- The setup of separate billing systems by Omantel resellers to support product innovation - Differentiated value added services from what is being offered by Omantel - Agreement of a separate discount structure for resellers, different from what is being

offered by Omantel mobile retail, but proportional in value, to support independent pricing and innovation

In recognition of its role in supporting resellers, Omantel was selected as one of the top three wholesale operators in the world, at the MVNO World Congress in Germany in 2014.

Omantel recommendation


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It is our view that the wholesale market has developed progressively at the right pace as a result of industry cooperation. We feel that the market should be allowed to continue to evolve based on commercial requirements of the different players, with a ‘light-touch’ regulatory intervention by the Authority as and when deemed appropriate.

5.2 Question 2 – Objectives to consider in developing the new regulation

Do you agree that the Authority has identified the correct objectives to consider in developing the new Regulation? If not, please specify the additional objectives you believe the Authority should consider, together with your reasoning for these.

Omantel agrees that the Authority defined the correct objectives to consider in developing the new regulation.

However, we note that the proposed regulation presents a serious threat to achieving objectives 5 and 6 as per the Telecom Act, which states that the Authority aims to accomplish the following:

5. “To safeguard the interests of beneficiaries and dealers with respect to prices of equipment and the rates, quality and efficiency of telecommunication services.”

6. “To ascertain the financial capability of the licensees.”

The Authority’s direct intervention in setting the price for the majority of wholesale telecom services – through a costing methodology that is not suited for the purpose, in a manner that is not common in other parts of the world – is in direct contradiction with the stated objectives. The proposed pricing approach (based on LRIC costs) is suitable for the pricing of a

certain subset of wholesale services such as mobile and fixed call termination. However, the Authority is proposing a regulation that is not in line with international best practice, by proposing to regulate services such as IP international capacity, access to landing stations, and MVNO access based on LRIC costing. We note that such a practice is untested, and its implications on the sustainability of operators are not known.

5.3 Question 3 – Structure and approach of the A&I Regulation

Do you support the structure of the draft regulation? If not, please set out your reasoning.

Omantel understands that the TRA seeks to develop in a comprehensive manner a set of rules and regulations that would cover all regulated and unregulated A&I services within a single document (the A&I regulation).

The resulting structure of the draft regulation document is therefore that of a complex, multi-layer list of obligations to be imposed on entities, in particular dominant entities, as illustrated in Figure


Page 25 of 56

5.2. The fact that the consultation document is built as a separate document explaining the

structure of the draft regulation is in itself evidence of the complexity of the draft regulation.

It is still unclear to Omantel why the TRA is proposing a new regulation instead of continuing with the current structured approach. The complex structure of the draft regulation document adds unnecessary difficulty for operators trying to understand which obligations are relevant to them, even more so in the case of Omantel, which is currently deemed as dominant in all 10 wholesale markets identified by the TRA

Figure 5.2: Layers of rules and obligations set out in the A&I draft regulation [Source: Omantel, the TRA, 2014]

Part Content Obligation applicable to

dominant entities

Obligation applicable to

non-dominant entities

A Introduction Not applicable Not applicable

B General rules and obligations

applicable to all services

C General rules and obligations

applicable to unregulated services

D General rules and obligations

applicable to regulated services

E Discretionary obligations F Service specific obligations

Omantel understands the benefits of this proposed approach from the perspective of the TRA as it does facilitate the TRA’s regulatory activities by having one single document to refer to and update. Omantel also understands the TRA’s ambition to provide predictability to market players as to the rules and obligations that would remain applicable to a service if its status were to move from regulated to unregulated or vice versa.

However, from Omantel’s perspective, this is not the best approach for a number of reasons:

1. Such a separate document breaks the crucial linkage between obligations and justifications. As highlighted before in this document, it is crucial that regulatory intervention

addresses problems identified in the market in order to avoid over-regulation or ‘regulation for the sake of regulation’. Omantel understands that the MDD documents are the key regulatory documents where the TRA identifies the presumed market failures and would be in a position to justify obligations and other regulatory remedies in order to address these market failures. Creating a separate comprehensive document which lists a set of rules and obligations applicable to all undertakings, non-dominant undertakings and dominant undertakings (depending on the section of the document), with no reference to the MDD documents breaks the crucial connection between justification and analysis on the one side, and remedies and obligations on the other side. By using the approach and introducing new obligations ex nihilo, the TRA can be seen to attempt to bypass the principles that regulation should be grounded on a thorough analysis of market conditions in order to produce a fair and balanced regulatory framework through justified and proportionate obligations.


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2. This broad comprehensive document does not bring clarity, predictability and simplicity to the regulatory framework. Omantel understands that a key aspect sought by the TRA for

the development of the draft A&I regulation is the simplification of the obligations in relation to access and interconnection, which would all sit in a comprehensive catalogue within a single document. However, Omantel is of the opinion that it is not clear where this new regulation sits within the existing legal and regulatory framework applicable in Oman. In particular, the interactions between the Telecoms Act, passed regulations, the obligations listed in the existing MDD documents are unclear. Similarly, it is unclear whether the content of the new A&I regulation may be superseded in the future by forthcoming regulations, e.g. MDD documents. Finally, the proposed A&I regulation document is a mix of rules and obligations related both to symmetric regulation (i.e. applicable to all undertakings, as in part B and somehow also part C4) and asymmetric regulation (i.e. applicable to undertakings found to be dominant in one or

several relevant markets).

A mix of symmetric and asymmetric regulation makes it confusing for industry parties as the objectives of symmetric and asymmetric regulation are typically very different and it may even create operational difficulties for the TRA as the occasions when the two types of regulation need to be reviewed are also typically different.

3. The approach of creating a separate comprehensive catalogue of A&I obligations is not best practice. Omantel understands that the approach proposed by the TRA may have been

put forward for the purpose of creating a simpler go-to catalogue listing the obligations applicable to each licensed undertaking in the Omani telecoms market. However, Omantel is not aware of any developed market where such an approach has been followed. In particular, in European markets,5 the approach taken by all national regulatory authorities (NRAs) was to (i) separately publish symmetric and asymmetric obligations, and (ii) list the obligations applicable to entities holding SMP within the market review document – not separately. This approach is applied even though the number of undertakings operating in the telecom market is significantly higher given the current authorization regime in practice in these jurisdictions. In the Middle East, even neighboring GCC countries such as the UAE, Qatar or Bahrain do not follow the approach of publishing a comprehensive separate catalogue of A&I rules and obligations mixing symmetric and asymmetric regulation.

Based on this, Omantel therefore suggests an alternative approach which could be followed:

The TRA should release a document covering the symmetrical A&I rules and regulations applicable to every undertaking in the provision of A&I services, regardless of whether the service is regulated or un-regulated. This document should clearly state the policy objectives to be achieved, and if relevant identify problems to be fixed. Then the document would set out the

4 The distinction between symmetric and asymmetric regulation does not cater for specific obligations that

would apply specifically to non-dominant operators. By default, these would be included in the

symmetric regulation.

5 European markets are often seen as best practice in terms of telecom regulation, and EU telecom

regulation was also partly followed by TRA on various occasions, such as the starting point for market

dominance designation and the definition of relevant markets.


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rules and obligations the TRA proposes and very importantly would provide a rationale for imposing symmetric obligations, to be put to public consultation.

If the TRA believes the price control remedy for one or several of the services covered by the MDD documents, then the TRA should publish a specific document on this topic. This was for instance the case in Belgium and in Malta when EU regulators released additional regulations to specify obligations which had been specified before in a generic fashion in the market reviews.

If the TRA believes the asymmetric obligations need to be reviewed due to a significant change in market conditions, then the TRA should initiate a new round of market reviews and publish new MDD documents for the relevant markets. The ‘service-specific’ rules and obligations or other regulatory remedies applicable to dominant undertakings would thus come as the conclusions of market review within those documents, as per the current framework.

The approach Omantel proposes above allows:

a greater linkage to the justification of obligations the TRA will impose, thus making the decisions easier to understand

a better differentiation between symmetric and asymmetric regulation, thus bringing more clarity and simplicity

a better alignment with the best practices observed in other advanced markets

5.4 Question 4 – Nature of obligations in Parts B, C, D and E of the I&A Regulation

Do you support the categorization of obligations to be imposed on dominant operators in the relevant markets in which they have been designated as dominant? Are there additional obligations you believe ought to be imposed?

As stated in the response to the previous question, Omantel believes the structure of the draft regulation is not appropriate as (i) it breaks the crucial linkage between obligations and justifications, (ii) this document does not bring clarity, predictability and simplicity to the regulatory framework, and (iii) the approach of creating a separate comprehensive catalogue of A&I obligations is not best practice. Omantel therefore respectfully requests that the TRA withdraws the draft regulation and reviews its approach based on Omantel’s suggestion.

As it currently stands, the generic obligation of access to passive infrastructure and in-building wiring is excessive, inappropriate and not clear enough

Regarding the scope of symmetric obligations proposed by the TRA as part of the rules applicable to all A&I services (part B), Omantel wishes to comment on the access to “certain physical infrastructure and other facilities” (paragraph 7.3 of the A&I Regulation). Omantel understands that


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the TRA requires any ‘Public Telecommunications Licensee’ to be obligated to negotiate and provide access to passive infrastructure network elements6 as well as in-building wiring.

First, Omantel wishes to stress that the scope of the physical infrastructure covered by this regulation is very broad, from mobile elements like towers and masts to fixed elements like dark fiber, trenches and ducts, including associated active equipment as well as in-building cabling.

Second, Omantel acknowledges that infrastructure sharing in its multiple forms is an important topic and believes that it is relevant for the TRA to address it and provide guidelines. However, this needs to be led by a broader policy objective which needs to be spelt out clearly. In the current regulation, the policy objective is not clear and therefore does not provide a justification for the rules and regulations that the TRA seeks to impose. For instance, it is not clear whether these regulations exist for the purpose of making available infrastructure that is impossible to replicate (e.g. in-building wiring) or whether these regulations aim to encourage the sharing of mobile infrastructure (e.g. towers and masts) in order to limit the visual impact or some other reason.

The TRA uses an undifferentiated approach to symmetric obligations unrelated to a clear objective which results in the same level of obligations applying to all passive infrastructure services and in-building wiring when a more differentiated approach with different levels of obligations might be more relevant. In particular and as further explained in the response to Question 8, Omantel believes imposing access to dark fiber on all entities in a broad and generic sense is excessive, unjustified and disproportionate. Similarly, imposing on all entities to provide access to their ducts is excessive, in particular before the extent of these ducts has been assessed and before a duct survey has concluded that there would be spare capacity in ducts.

In addition, the level of detail provided by the TRA in the obligations does not take into account the pragmatic and operational realities of network sharing, which would require more details to be enforced. For instance, where other GCC regulators such as ictQatar or European regulators like ARCEP have dealt with the issue of in-building cabling by issuing practical guidelines, operational recommendations to provide predictability and transparency, The TRA does not provide the same level of predictability and transparency by issuing a simple generic obligation to offer access to in-building wiring without specifying the level at which the in-building wiring may be accessed or the sort of arrangements which may prevail.

Therefore, Omantel is of the opinion that the TRA should review its policy objectives7 and formulate

a more detailed regulation with regard to fixed and mobile network sharing in line with its policy objectives and more in line with the practical requirements of network sharing.

6 Passive infrastructure network elements are defined in the Regulations as “all of the civil engineering

and non-electronic elements of a Telecommunications Network, including, but not limited to, masts,

towers, poles, ducts, trenches, dark fibre, physical sites, buildings, shelters and associated air-

conditioning equipment, diesel electric generators, power supply and battery backup”.

7 As part of the policy objectives, TRA will need to decide which stance it wants to adopt between

obligation, recommendation or invitation.


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The non-discrimination obligation applicable to unregulated services is not clear enough

Regarding the rules applicable to unregulated A&I services (part C), Omantel wishes to comment on the access to the “non-discrimination obligation” (paragraph 8.4 of the A&I Regulation).

As per the regulation, the TRA would impose on non-dominant undertakings that they shall “treat all similar Requesting Parties and Wholesale Customers in an equal, objective and non-discriminatory manner, where the failure to do so would, in the view of the Authority, harm competition or consumers.”

Omantel is of the view that the TRA does not specify enough the extent and meaning of how discrimination may “in the view of the Authority, harm competition or consumers”. A more clear and transparent set of criteria on how the authority evaluates ‘harm to competition and consumers’ is needed to support regulatory certainty.

Omantel would therefore recommend that the TRA clarifies the nature and scope of this obligation so it is easier to impose, unless the TRA prefers to handle similar cases using ex-post regulation.

Discretionary obligations are excessive, in particular non-discrimination obligations

Regarding the discretionary service specific obligations (part D), Omantel wishes to comment on the access to the “non-discrimination obligations” (paragraph 8.4 of the A&I Regulation).

Omantel believes these discretionary obligations are excessively intrusive in their nature and scope, and the discretionary nature of how they could be imposed does not bring predictability and certainty to the regulatory framework. Omantel strongly believes such stringent obligations must be imposed only on the basis of a clear assessment of justification and proportionality.

For instance, the equivalence of input obligations would put a very heavy operational burden on a regulated entity to re-organize itself in order to provide exactly the same inputs8 to a wholesale customer as to the retail business operation of the dominant operator. It is also likely to be wholly impractical for services where the regulated wholesale product is not the same as that supplied to the retail arm (e.g. end to end voice calls rather than origination and termination; wholesale leased line terminating and trunk segments as opposed to end to end leased line).

Similarly, the prohibition on offering new/modified retail service that cannot be replicated will restrict the time-to-market of a dominant entity because the dominant entity would need to go through the full process of service development for both the retail and wholesale offers. Omantel is of the view that such intrusive obligations will have an impact on the welfare of consumers by slowing down the ability of Omantel to create new offers and to adapt to others’ new offers – imposing a minimum delay on all new retail services, and imposing a heavy compliance burden on Omantel and the TRA.

8 The same terms and conditions, including feature-functionality, quality of service levels and price, using

the same timescales, and using the same systems and processes for service ordering, delivery and

maintenance, repair, etc. as is provided to the dominant operator’s own retail business operation.


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The broad impact of these obligations is illustrated in Figure 5.3.

Non-discrimination discretionary service-specific

obligation

Impact on dominant operator Figure 5.3: Impact

of non-

discrimination

obligations from

the set of proposed

discretionary

obligations

[Source: Omantel,

2014]

Offering of reasonable and non-discriminatory

SLAs/SLGs

Operational burden

Provision of the same information on regulated

A&I services to all requesting parties

Operational burden

Prohibition on offering new/modified retail service

that cannot be replicated

Restriction on time-to-market

Advance provision of information on

new/modified regulated A&I service

Restriction on time-to-market

Pricing of regulated A&I service Restriction on retail commercial

strategy/flexibility

Objective justification of volume/term discounts Restriction on retail commercial


Equal treatment when offering volume

discounts/long-term arrangements

Restriction on retail commercial


No bundling of regulated A&I services Limited, other than in cases where

bundling is essential

Equivalence of input Operational burden

Omantel strongly believes the TRA needs to assess with great care the regulatory burden it would impose on dominant entities and their related side effects before the TRA imposes any such discretionary obligation, in particular related to non-discrimination obligations.

5.5 Question 5 – Content and process for development and review of reference offers

Do you support the proposed process for the development and review process for approving reference offers?

With regard to the content of reference offers and the process for developing and reviewing these offers, Omantel wishes to comment on the following aspects:

1. Content of the reference offers

2. The process for RAIO approval

3. Timelines for the development of the reference offers

4. Other provisions for review and amendment


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Content of the reference offers

Omantel does not agree with the structure of the reference offer as proposed by the TRA, on the following aspects:

A. Level of detail required

Omantel believes the expected level of detail put forward by the TRA to specify the RAIO is too detailed for the KPIs, SLAs and SLGs. Omantel suggests reducing the number of indicators prescribed by the regulation. Omantel is of the opinion that dominant operators will define the relevant indicators for each of the domains identified by the TRA (quality of service level, service ordering/provisioning/delivery, O&M and fault reporting/repair) in accordance with the nature of the relevant regulated services.

B. The risk of unreliable traffic forecasting

Article 12.3.3.iv of the draft regulation indicates that the “RAIO shall not require that a Wholesale Customer pay compensation to the Providing Party for inaccurate/incorrect forecasting outside this margin of error”. Omantel notes that effective forecasting is an important activity that allows wholesale providers to invest in network upgrades to support the growing demand while maintaining a consistent quality of service. In fact, the European Commission recommends arrangements for providing lower wholesale pricing in return for more demand certainty and commitment on long term or volume contracts9.

An inaccurate forecast that is substantially higher than actual use may result in the provision of new capacity, leading to over-investment by the Providing Party. This would potentially lead to higher unit costs for the Providing Party and for other Wholesale Customers. While the Providing Party may be able to tolerate unreliable forecasting up to a certain extent, Omantel notes that arrangements involving substantial amounts of traffic and a corresponding investment are better served through a joint risk-sharing approach whereby the Wholesale Customer and the Providing Party agree on certain mutual commitments including compensation in case of a significant variation from forecasts.

The process for RAIO approval

We would like to highlight the following aspects of concern regarding the RAIO approval process.

A. Conducting a consultation on the draft RAIO is redundant

Omantel notes that performing a public consultation with access seekers on the draft RAIO is a counterproductive and redundant process, noting the following:

Access seekers have an inherent interest to propose aggressive pricing terms and conditions in the Omantel RAIO, and will provide a highly subjective view

9 http://europa.eu/rapid/press-release_MEMO-10-424_en.pdf

http://europa.eu/rapid/press-release_MEMO-10-424_en.pdf


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The Authority is not in a position to make a judgment on the merits of detailed commercial and technical arguments presented by access seekers in a RAIO consultation response, without significant effort and involvement; such complex commercial and technical arrangements are best left for industry players to sort out among themselves

We believe the RAIO should be detailed only to the level required by the Authority to achieve effective regulation of the sector. A RAIO with such a level of detail would be most effectively assessed by the independent and objective experts at the Authority, and would not require a process of soliciting feedback from access seekers, which may provide a biased view.

Further discussion on complex technical and commercial arrangements should take place between Omantel and the access seeker directly as these may differ case by case, with a resort to the Authority’s dispute resolution mechanism in case of disagreement.

B. Unwarranted intervention in internal management of the Dominant Operators

Article 13.3.3.i of the draft regulation indicates the authority can request the Dominant Operator to “implement any such modifications in exactly the manner as directed by the Authority and within the timeframe as specified by the Authority”.

We note that exercising such a power by the Authority would present a direct intervention in the management of the Dominant Operator. The Authority may not be in a position to dictate such terms in the RAIO, as it may not have the full knowledge on the internal possibilities and constraints on the commercial and technical sides that may be applicable within the Dominant Operator.

Omantel is in favor of a collaborative RAIO development process whereby the Authority provides feedback and guidance on the principles of conduct for the Dominant Operators, without intrusive intervention in drafting the RAIO.

Timelines for the development of the reference offers

Omantel is of the view that the time suggested by the TRA for the first round of development of the RAIO is too short. If the TRA goes ahead with this regulation, which Omantel believes is excessive in many aspects laid out in this document, then a substantial effort would be required by Omantel prior to publication of the first draft RAIO.

The TRA proposal involves the implementation of LRIC cost-based pricing for a large number of services. The development of such a complicated model for the broad set of fixed and mobile services indicated is a lengthy process, requiring a time frame of four to six months, involving phases of data collection, analysis, and verification. Dominant Operators are also required to provide detailed specifications for each RAIO service, as per the proposed regulation.

To reflect the complexities of developing a new set of RAIOs for an extensive number of services and the cost modeling involved, we propose a time frame of 6 months for developing the first draft RAIOs.

Similarly, Omantel believes 15 days to review the reference offers further to comments received is not sufficient, and that a 45 working day period is more reasonable.


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Other provisions for review and amendment

Omantel suggests that the following provisions of the draft A&I Regulation in respect of RAIO and access and interconnection agreement should be reviewed:

The provision regarding the TRA power to establish interim provisions given in section 11.11 of the draft A&I Regulation creates an uncertain regulatory environment for the Dominant Operator. Omantel would like the opportunity to analyze the impact of such provisions that replace existing A&I agreements. In case of any undesirable impact, A&I agreements that were previously in place should be reinstated, as these have already been notified after mutual consent of operators and the TRA’s approval.

The proposed draft A&I Regulation does not provide the time frame for phase out of the interim provisions established by the TRA which again, create uncertainty for the dominant operator.

The requirement to seek the TRA approval for termination of agreement/service is onerous especially when the other party is in breach of its obligations including payments. This would provide incentives for other parties to dispute or delay the payment of charges on one pretext or the other with the aim to avoid compliance with their obligations.

The proposed regulation provides clear and strict timelines for the response of SMP operators in providing a RAIO. We also note that best practice would involve a commitment on the side of the Authority on the time needed for RAIO approval. This is an important component that is missing from the proposed regulation, and that would lead to regulatory uncertainty potentially putting the market in a state of paralysis. The access seekers will hold off on purchasing new services, in anticipation of a new RAIO, but the new RAIO is being held off indefinitely by the Authority creating a lack of transparency in the process. To address this issue, Omantel proposes a 45 day consultation review period by the Authority. In case no response is received within the specified timeframe, the RAIO would be considered as approved.

5.6 Question 6 – Service Annex on fixed interconnection services

Do you support the obligations described in the draft Service Annex? If not, please provide, with explanation, a description of the amendments to this Service Annex which you believe would better reflect the Authority’s objective.

Omantel supports the proposed regulation of fixed interconnection services, with certain exceptions outlined below.


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Service Draft A&I regulation

(regulation/pricing approach)

Omantel’s

position


change (regulation/pricing)

Call origination – carrier pre-selection Regulated service / FL LRIC

Not accepted Omantel accepts this

obligation only in case full

cost recovery is allowed

Call origination – call by call selection Regulated service / FL LRIC




Call origination for non-geographic

calls Regulated service / FL LRIC




Call origination – prepaid calling

cards Regulated service / FL LRIC




Outgoing international calls Regulated service / FL LRIC Not accepted Not regulated / commercial

agreements

Outgoing aeronautical and maritime

calls Regulated service / FL LRIC

Accepted --

Calls to emergency services Regulated service / FL LRIC Accepted --

Calls to directory enquiry services Regulated service / FL LRIC

Not accepted Service to be removed - To

be regulated under call

origination

Prepaid calling card access type 1 Regulated service / FL LRIC Accepted --

Prepaid calling card access type 2 Regulated service / FL LRIC Accepted --

Call termination Regulated service / FL LRIC Accepted --

Incoming international calls Regulated service / FL LRIC Not accepted Service not to be regulated

Call transit Regulated service / FL LRIC Accepted --

IP interconnect Regulated service / FL LRIC Not accepted Service not to be regulated

The regulation of call origination (carrier pre-selection / call by call selection / non geographic calls / prepaid calling cards)

Offering call origination through any of the proposed services (carrier pre-selection, call by call selection, non-geographic calls, prepaid calling cards) requires the procurement and setup of expensive equipment by the Providing Party. However, call origination is being increasingly deregulated to the technical complexity of the solution, and due to the emergence of effective competition in the international calling market through VOIP technologies and through mobile.

Omantel is willing to offer call origination services to the Requesting Parties subject to the following considerations:

1. The costing model for pricing call origination would allow for recovering the economic costs needed for offering this service


Page 35 of 56

2. In case the expected low demand for call origination does not allow for recovering costs, the investments would be considered as ‘unavoidable costs’ attributed to the Authority’s regulatory requirements, and the cost of the equipment would be recovered through other services

Omantel notes that it would be unfair for the Authority to put an obligation for providing such a service with limited commercial viability, and not allow for full cost recovery.

The regulation of outgoing international calls

Outgoing international calls involve three layers of cost: the cost of conveying the traffic on the Wholesale Provider’s network to a point of interconnection with the international partner, the cost of international capacity on the international connectivity networks, and the cost of international termination on the receiving party’s end. Therefore the cost of the call is predominantly determined by the Wholesale Provider’s ability to negotiate attractive terms for acquiring wholesale international capacity and favorable international termination rates, through complex partnership agreements with global providers.

Omantel notes that a wholesale provider’s ability to achieve a competitive cost of international outgoing calls is due to that provider’s international wholesale commercial strategy and ability to negotiate attractive terms. Hence, the ability to achieve a low cost is due to an internal source of competitive advantage for the operator, and not due to a specific market position. For example, it is known that Nawras is a subsidiary of a regional group with investments in international capacity and potentially group level agreements that allow attractive pricing terms. This is also a source of internal competitive advantage that Nawras should be able to benefit from, with access bythe Requesting Party’s being provided on commercial terms.

We also note that the competitive environment is quickly changing with more competition coming into effect through the following:

A rapid decline in international calling traffic due to VoIP substitution

An increase in international cable connectivity through sea and terrestrial routes, and the joint collaboration of Omantel and Nawras on further investments in this sector

An increase in the number of international gateway licensees to four

Considering the above, Omantel does not agree with the cost-based approach for pricing outgoing international calls, and recommends that outgoing international calls should not be regulated, and would be subject to commercial agreement among market players.

The regulation of calls to directory enquiry services

The Authority notes the definition of calls to directory enquiry services as follows:

“Calls to Directory Enquiry Services is a Fixed Interconnection Service which comprises the conveyance of telephone calls from a Point of Interconnection with the Requesting Party’s


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network, across the Providing Party’s network and delivered to a directory enquiry centre. The service may be bundled with provision of the directory enquiry information”

The mentioned service actually consists of two distinct services, which are:

1. The call origination service to the directory enquiry service 2. The provision of the directory enquiry information

Omantel notes that the ‘call origination’ part of the service is already regulated under the previously mentioned services, while the provision of directory enquiry information is a highly competitive market that does not require regulation, due to the low barriers to entry.

As such, we recommend this service to be removed from the Annex.

The regulation of incoming international calls

Omantel notes the definition of incoming international calls as “the conveyance of telephone calls originating from an international source, from a Point of Interconnection with the Requesting Party’s network, across the Providing Party’s network and terminating on a customer’s line, as identified by the address digits transmitted by the Requesting Party”. Our understanding is that this service category includes service charges for all calls originating at an international source, regardless of whether the requesting party is based domestically or internationally. In case this is not the definition intended by the Authority, we request a clarification with a more specific description of the service.

Incoming international call termination is currently negotiated on a commercial basis with our international calling partners, with the exception of calls originating in the GCC region which are subject to a common price.

Omantel notes that the current commercial pricing approach is optimal for achieving supply and demand equilibrium, at the price that is acceptable by the market.

In terms of the effect on the consumer, we note the following:

The incoming international call pricing has no impact on the Omani consumer, as it only reflects the price of other countries calling to Oman

Unlike other countries with significant expatriate populations such as India and Pakistan, the number of Omani expatriates abroad that could be impacted by a potentially high call price is limited

We also note that this market is by no means a monopoly, as the market is highly competitive with four regulated licensees in Oman having access to an international gateway, ensuring a fair and competitive market price.

As such, Omantel believes that there is no merit in regulating such a market with strong competitive forces for achieving fair price, and where there is no expected benefit of regulation to the Omani consumer.


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The regulation of IP interconnect

The proposed regulation defines IP interconnect as a service “comprising the conveyance of Internet Protocol messages (packets) from a Point of Interconnection with the Requesting Party’s network, across the Providing Party’s network and delivered to a destination on the Internet defined by the IP address in each message”. Our understanding is that this service corresponds to domestic IP peering (i.e. exchange of internet traffic between two operators, and not point to point IP connectivity). In case this is not the definition intended by the Authority, we request a clarification with a more specific description of the service.

Omantel notes that the IP interconnect service should not be a regulated service, in light of the following considerations:

IP interconnect is already existing in Oman between Omantel and Nawras on a commercial basis, and regulation may stifle a well-functioning market if the incentives are not properly aligned

A high degree of traffic symmetry between Omantel and Nawras is likely to ensure the continued incentives for interconnect and a balance in negotiation capability

The service can be directly substituted through international IP transit, which is already witnessing fierce competition and low prices due to the substantial capacity availability

A forward looking regulation should take account of the future plans of setting up an internet exchange point in Oman, which would alleviate the need for regulating IP interconnect, as all parties will be connected to the Oman IXP


Omantel notes that the regulation of call origination services should allow for a full recovery of the relevant investments, particularly as these are services being implemented for ‘regulatory compliance’ despite low commercial feasibility.

We also note that directory enquiry services, outgoing international calls, international incoming calls, and IP interconnect services should be removed for the reasons mentioned.

5.7 Question 7 – Service Annex on mobile interconnection services


Omantel supports the continued regulation of mobile call termination on a LRIC cost orientation basis. However, Omantel disagrees on the need to regulate mobile call origination, due to the reasons detailed below.



Omantel’s position Omantel’s suggested change


Mobile call termination Regulated service / FL LRIC Accepted –


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Mobile call origination Regulated service / FL LRIC Not accepted Not regulated

The regulation of mobile call origination

Our understanding is that mobile call origination as defined in this service annex particularly refers to mobile carrier selection, as the obligations for national roaming and MVNO origination are defined in other service annexes.

Omantel believes the mobile call origination service should not be regulated, in light of the following considerations:

1. Mobile call origination is not typically regulated at a global level; consumers have mobile options including alternative mobile operators, MVNOs, in addition to VoIP services and fixed voice services including carrier selection. This is further highlighted by international benchmarks, as a recent ITU report shows only two out of thirty-one countries in the European Economic Area (EEA) that regulate call origination.

Figure 5.4: Regulation of mobile call origination in Europe [Source: ITU ICT Eye, 2014]

2. The market for international calling, which would typically be the primary reason for providing call carrier selection, has witnessed an effective level of competition. This is evidenced by aggressive pricing schemes targeting the different ethnic communities, such as ‘Friends and Family’ by Omantel.

3. Allowing access to mobile call origination at price regulated levels to parties other than facilities based operators could open up the opportunity for grey market providers of international calling services, with detrimental impacts on quality of service and consumer welfare.

4. The proposed Access and Interconnection regulation should be forward looking to take into account the changes in technology such as the emerging usage of VoIP services, which is leading to the gradual decline of traditional mobile call origination services. This is further fuelled by the availability of affordable smart phones and attractive data packages.


It is our recommendation that the mobile call origination market should not be regulated.

2

29

Price regulationNo price regulation


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5.8 Question 8 – Service Annex on fixed access services


Omantel believes that the list of services defined for regulation in this service annex is disproportionate to the current market needs.

Omantel has invested a substantial percentage of revenues in network expansion, modernization, and rollout of new technologies. Investments have been undertaken to transform to an NGA network, with a focus on modernizing the copper network and installing MSANs in cabinets closer to customer premises to allow for the delivery of high-speed broadband, in addition to aggressive fiber roll-out in greenfield and brownfield locations.

The proposed regulatory approach should take account of the new investments by Omantel. This is essential to ensure an attractive level of return is achieved on new investments, and to promote further investment in fixed network modernization and expansion, towards achieving Oman’s National Objectives on broadband connectivity.

5.8.1 Market 12: Wholesale network infrastructure access at a fixed location

Omantel agrees on the need to regulate local loop unbundling, line sharing and co-location on the basis of cost orientation, as outlined in the draft A&I regulation. However, we disagree on the need to regulate duct access and dark fiber for the reasons explained below.

Figure 5.5: Summary of proposed regulation for Market 12 (wholesale network infrastructure at a fixed location)



Omantel’s position Omantel’s suggested

change (regulation/pricing)

Local loop unbundling (LLU) Regulated service / FL LRIC Accepted –

Local loop unbundling (line

sharing) Regulated service / FL LRIC

Accepted –

Co-location Regulated service / FL LRIC Not accepted Regulation should only

apply to LLU co-location

Dark fiber Regulated service / FL LRIC Not accepted Not regulated / commercial

agreements

Duct access Regulated service / FL LRIC Not accepted Not regulated / commercial

agreements

The regulation of colocation

Omantel agrees with the suggested regulation for co-location services at facilities where a presence is needed to implement local loop unbundling.


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Other co-location services such as data centers are not subject to constraints on space and location, have low barriers to entry, and therefore should not be subject to regulation.

The regulation of duct access

The focus of Market 12 is to regulate network infrastructure access for the Omantel legacy network. As per the MDD report:

“The focus is therefore on those infrastructural assets that were established under conditions of privilege the circumstance so which cannot be replicated by new or recent entrants to the market. In these assets Omantel has a high market share.”

Omantel agrees with the stated objective of regulating services on the copper network that were established under conditions of privilege. Global and European regulation on duct access started to gain traction even before NGA networks, as many regulators had mandated infrastructure sharing with wholesale products such as duct sharing. However, these wholesale products have been designed in the context of existing networks: traditional copper-based services and largely depreciated infrastructure (networks in operations for more than 40 years ago in most cases in Europe).

It is important for the TRA to note that the context for regulating duct access in Oman is substantially different:

the legacy copper network has limited ducts, as the historical copper roll-out involved buried cables

most of the ducts on the Omantel network are a result of recent greenfield/brownfield fiber deployments.

As such, duct access in Oman should be treated as an NGA service, and the pricing approach should reflect relevant levels of risk involved (including demand risk).

Prior to a regulation on ducts, Omantel believes the first step needed by the TRA is to perform a “duct survey” to evaluate the current extent of duct availability and capacity constraints. The outcome of the survey would provide valuable feedback on the need and the best form or regulation.

The regulation of dark fiber

The regulation of this service as a wholesale product does occur in some other countries, but in a proportionate manner. We surveyed nineteen European markets for the regulation of dark fiber. Only nine countries out of the nineteen have mandated dark fiber access, with just two regulating prices ex ante.

It is also interesting to note that recent decisions of regulators demonstrate a move away from dark fiber ex-ante pricing: CMT in Spain has decided in 2009 not to regulate prices, as did ARCEP in France.


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Similar to other markets, we believe a cautious approach to dark fiber regulation is needed in Oman, for the following reasons:

Fiber roll-out in Oman is at an early stage, and an excessive degree of overregulation will dis-incentivize operators from investing. Open-access obligations are more suitable for mature technology deployments, such as copper loop unbundling.

A forward-looking regulatory view should take account of the Oman Broadband Company initiative, which has the potential of achieving a very fast roll-out, particularly in Muscat and areas of high commercial attractiveness, thus providing an effective level of competition

Until national fiber initiatives come into action, open-access LLU as mandated by the regulation presents a viable alternative for access seekers.

Omantel notes that the TRA has not sufficiently analyzed the market for dark fiber, as the market definition presented in the MDD report is specifically for local loop unbundling. Dark fiber is subject to different supply and demand constraints than specified in Market 12, and consequently remedy obligations for Market 12 are not applicable to dark fiber.

More specifically, we note that dark fiber is being jointly rolled out by Omantel and Nawras, under conditions of a level playing field. As such, any finding of SMP would have to be a finding of joint dominance, and any open-access obligations would have to be equally applicable to both operators. This is in stark contrast to the current definition of Market 12, which focuses on LLU, and where Omantel is rightly designated as the single dominant operator.

As per the draft A&I regulation, a new service obligation should only be imposed after the conclusion of a market review on dark fiber by the TRA. We recommend that a full market review be performed before any such regulation can be imposed.

Other comments

The MDD report further mentions ‘access to landing stations’ as a service regulated under Market 12 (MDD report P37), while the same service is currently included in Market 16 in the ongoing A&I consultation. Omantel would point to the importance of consistency regarding the markets and services across the different regulations.


Omantel believes that further market analysis is needed prior to ex-ante regulation on duct access and dark fiber.

5.8.2 Market 13: Wholesale broadband access at a fixed location

Omantel is aligned with the TRA’s objective of increasing competition in the broadband market. In line with this objective, we support the view that all the mentioned services in this market would be regulated. However, we propose a different pricing approach for bitstream services as outlined below.


Page 42 of 56



Omantel’s

position

Omantel’s suggested change


Wholesale line rental Regulated service / FL LRIC Accepted –

Bitstream layer 2 Regulated service / FL LRIC Not accepted Regulated service / retail

minus

Bitstream layer 3 Regulated service / FL LRIC Not accepted Regulated service / retail

minus

Wholesale transmission Regulated service / FL LRIC

Not accepted Service to be removed – this

is already regulated under

market 14 and 15

Broadband resale service Regulated service / Retail minus Accepted –

The regulation of bitstream services (layer 2/3)

Omantel agrees on the importance of regulating this service to enhance consumer choice and allow for effective competition in the market. In achieving an effective implementation of this regulation, it is important to ensure the right incentive levels for infrastructure providers to continue investing in the network and in new technologies.

Oman is a country with a special geographical nature and a widely dispersed population, whose density is the lowest among GCC countries and one of the lowest in the world. The fixed broadband penetration level in Oman is still low by regional and global standards at 39% of households10, and there is the need for a sustained investment effort to achieve the levels of penetration targeted by the TRA and the government.

Omantel is fulfilling and exceeding its national socio-economic obligations as the incumbent operator, by making substantial investments in upgrading to an NGA network allowing high-speed broadband for more users. As a reflection of these efforts on consumer welfare, we recently upgraded our broadband customer base to higher speeds at no additional cost to the customer.

However, the Omani broadband market is characterized by a high degree of uncertainty at multiple levels. Mobile broadband has emerged as an aggressive competitor to fixed, with aggressive price plans on the market that are most attractive for the largest consumer segment (low price, low usage). This has introduced a high degree of uncertainty on the pricing regarding NGA services, particularly as media consumption is primarily through satellite, and mobile broadband presents an attractive fixed substitute. Demand uncertainty presents another challenge, particularly for roll-out in areas of lower population density and consequently lower commercial attractiveness.

In light of the substantial investment risk involved in rolling out NGA networks and the need for massive investments to achieve the target coverage, we would like the TRA to take into

account the following considerations in regulating NGA networks:

10 TRA market indicators Q4 2013


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Regulators in all parts of the world have recognized the investment risks for incumbents. The policy debate has circled on whether incumbents should be mandated to provide services at a cost-based price, with the investment risk being incorporated through the cost of capital, or whether to allow a more flexible and commercially-based pricing approach.

A cost-oriented pricing approach for NGA networks allows access seekers the option to buy the services on a ‘pay-as-you-go’ basis, leaving the full investment risk with the incumbent.

As outlined in real options theory, an incumbent would be better off delaying investments until price and demand risks are further evaluated. However, this is likely to come at the expense of the national policy agenda for broadband roll-out.

In light of the above considerations, many regulators have applied more ‘investment friendly’ approaches in the regulation of NGA networks. For example, Ofcom in the UK has provided pricing flexibility based on commercial agreements for active NGA services (such as bitstream), to avoid the “risk of stifling investment if prices are set too low”.11 In fact, some markets as in

Ireland have set price floors for active network access services, to avoid dis-incentivizing investment in LLU and network infrastructure.12

Omantel believes the proposed regulation on the pricing of bitstream is not in line with best practice or with the interests of the industry in light of the following:

LRIC (on a national basis) does not reflect cost orientation for areas of less commercial viability – Access seekers may aim to leverage LLU in areas of high population density, and

bitstream in areas of low density and low commercial attractiveness. As per the TRA MDD report (page 38), 75% of MDF locations host only 15% of PSTN lines. These locations will have a LRIC cost that is substantially higher than the LRIC average. Omantel also notes that these are likely to be the locations of highest wholesale demand, as serious access seekers would leverage LLU access in more commercially viable locations. As such, the regulatory LRIC service cost will in fact be lower than the effective cost incurred by the operator, thus preventing the operator from a full cost recovery.

Bitstream is predominantly a resale service, with limited risk or investment by access seekers–A strict bitstream pricing approach would lead to a revenue shift from an FBO that has investment obligations, to a reseller that has no interest/obligation to invest in the network. This would have negative, long-term implications for network quality.

Effective competition already existing in the market – The availability of Wi-Max and mobile

broadband on 3G and 4G services at competitive pricing presents effective competition for bitstream services. We further note that other regional regulators, as in Bahrain, have removed SMP designations on the incumbent for bitstream services due to the availability of effective

11

http://stakeholders.ofcom.org.uk/binaries/consultations/nga_future_broadband/statement/statement.

pdf

12 http://www.comreg.ie/_fileupload/publications/ComReg1232.pdf

http://stakeholders.ofcom.org.uk/binaries/consultations/nga_future_broadband/statement/statement.pdf

http://stakeholders.ofcom.org.uk/binaries/consultations/nga_future_broadband/statement/statement.pdf

http://www.comreg.ie/_fileupload/publications/ComReg1232.pdf


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competition from mobile technologies13, which is also the case in Oman as evidenced by the

recent price benchmarking conducted that showed Oman among the cheapest of the GCC and OECD countries in mobile broadband. In terms of fiber rollout, the Oman Broadband Company can also achieve quick rollout, leveraging existing utilities infrastructure. As such, additional service alternatives other than LLU will be coming to the market in the near future, reducing the need for strict price-based regulation.

Oman stands to benefit from policies that promote broadband investment – Fixed

broadband penetration in Oman currently stands at 39%, well below international benchmarks, and with a significant opportunity for growth. An open-access policy based on strict price regulation would limit operator investment incentives, and consequently achievement of National Policy objectives.

Pricing of bitstream should not dis-incentivize investments in LLU – A pricing approach

for bitstream should reflect more than just the cost difference with LLU services to promote infrastructure investment in LLU by alternative providers. To support increased consumer welfare and higher investment, regulators aim to incentivize investment at the deepest level of non-replicable assets that is economic (i.e. at the local loop).

NGA investments do not represent part of the incumbent legacy obligations – As

mentioned in the discussion on Market 12, Omantel agrees on the need to consider LLU as a regulated service with ex-ante price regulation based on cost. This would provide an effective substitute for bitstream. We also believe that LLU should be the basis of broadband access as it represents the Omantel inherited legacy copper network, which should be subject to open-access.

Bitstream regulation will not lead to better quality for consumers– bitstream presents a form of service level competition, with no service level differentiation from what is currently being offered, and hence the impact of the regulation would lead to no enhancement of consumer welfare.

Our review of international benchmarks highlights widely varying approaches which are selected by the regulator depending on the country specific needs and policy objectives – the benchmarks on bitstream are evenly split between countries that apply for cost

orientation and others that allow for a commercial negotiation approach. Among the countries applying cost orientation, we note that there is a wide disparity in the approach applied, as evidenced by the following examples:

- The regulator in Italy (AGCOM) applied a BU-LRAIC pricing approach added with a 3% ‘investment promotion’ markup

- France applies cost orientation on an FDC approach, and not a LRIC approach as proposed in the regulation

13 http://www.telegeography.com/products/commsupdate/articles/2014/03/28/tra-finalises-broadband-

market-determinations/

http://www.telegeography.com/products/commsupdate/articles/2014/03/28/tra-finalises-broadband-market-determinations/

http://www.telegeography.com/products/commsupdate/articles/2014/03/28/tra-finalises-broadband-market-determinations/


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- The UK is only regulating bitstream for copper in rural areas (ie where LLU may not be possible)

- The Spanish regulator is applying a markup of up to 50% over cost-based prices, justified by the need for ensuring sufficient economic incentives. Also the regulation is limited to bitstream services up to a certain speed

As such, we note that even the benchmarks where cost orientation is applied for bit-stream services, regulators have an inclination for setting prices based on a ‘cost plus’ approach to ensure sufficient investment incentives.

In conclusion, Omantel notes that while LLU requires an investment in facilities (DSLAMs, routers, core nodes, links) by the operator buying access, bitstream has few required investments. In this respect bitstream access is much more similar to mobile resale (or ‘light MVNO’), where the TRA has already proposed a retail minus approach.

Multiple regulatory interventions in the same value chain (such as LLU, Level 2 bitstream, Level 3 bitstream) can lead to specific difficulties in relation to investment incentives (with access to resale services at the cost of a larger player deterring investment by the operator buying access) and arbitrage between the different products (where the operator can ‘cherry pick’ on an exchange by exchange basis, leaving the regulated operator with the burden of selling the managed service access only in the higher cost locations). While it does not remove these difficulties altogether, maintaining a retail minus approach for the resale-like offer helps to minimize their effects.

Given that bitstream is a pure reseller service with very limited risk and investment by the access seeker, we believe that bitstream services should be priced on a retail-minus basis. This would be in line with global best practice, as outlined in the EU approach for broadband networks14.

The regulation of wholesale transmission

Wholesale transmission is defined in the regulation as “a Fixed Wholesale Access Service comprising the provision by the Providing Party of a fixed capacity transmission facility between two Points of Access between the Providing Party and Requesting Party, so that the Requesting Party may transmit messages of all kinds across the facility”.

As the definition of this service involves the provision of a ‘fixed capacity’ transmission, it is quite similar to the leased lines services defined in market 14 and 15. In fact, the ‘wholesale transmission’ service can be delivered through either ‘wholesale terminating segments of leased line’, ‘wholesale trunk segments of leased lines’, or through a combination of both.

Omantel notes that this service definition is redundant and the service should be removed from the annex.


14 http://europa.eu/rapid/press-release_MEMO-10-424_en.htm?locale=en

http://europa.eu/rapid/press-release_MEMO-10-424_en.htm?locale=en


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Omantel believes that bitstream should be a regulated service subject to retail-minus pricing.

Omantel also notes that the wholesale transmission service is redundant and should be removed from the annex.

5.8.3 Market 14: Wholesale terminating segments of leased lines

Our understanding is that the market for wholesale terminating segments of leased lines focuses on providing capacity between a customer’s premises, and the first switching node on the service provider’s network. This service does not include mobile backhaul services, which would be regulated under Market 15 (‘wholesale trunk segments of leased lines’). Our understanding is that this market specifically refers to services on copper lines, as fiber access is regulated separately under market 12. In case this is not the definition intended by the Authority, we request a clarification with a more specific description of the service.

Omantel agrees on the need to regulate wholesale terminating segments of leased lines. Regulation for this service has typically focused on capacities of up to 155Mbit/s, as higher capacities tend to be regulated under Market 15 (wholesale trunk segments of leased lines).

The Spanish regulator, CMT, recently performed a benchmarking exercise15on the state of regulation in the market for wholesale leased lines at the time.16We note that the regulatory

situation in some of the countries listed in the table below may have evolved since this table was originally created. But the table does illustrate the variation in approaches to remedies in the wholesale market for terminating segments of leased lines.

Figure 5.6: CMT’s summary of regulatory remedies imposed by some European NRAs in the wholesale market for

terminating segments of leased lines [Source: CMT, 2013]

Country Sub-markets with different

obligations

Regulated access (Yes/No) Price control

Austria Below 2Mbit/s Yes Price cap

More than two below

155Mbit/s

Yes (except in the

12 largest cities)

Price cap

More than 155Mbit/s No –

Belgium No one market Yes –

Denmark Below 2 Mbit/s Y Cost orientation

More than 2Mbit/s Yes, limited to access,

transparency and non-

–

15 Resoluciónpor la que se aprueba la revisión de precios de la oferta de referencia de líneasalquiladas de

Telefónica de España, S.A.U. y se acuerda su notificación a la ComisiónEuropea y al Organismo de

ReguladoresEuropeos de ComunicacionesElectrónicas (ORECE) (AEM 2013/237). Available at

http://telecos.cnmc.es:8080/c/document_library/get_file?uuid=41280eeb-5158-4fd8-9971-

625df2a80553&groupId=10138.

16 Since the original resolution is in Spanish, we have translated the content in English.


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Country Sub-markets with different

obligations

Regulated access (Yes/No) Price control

discrimination

France Below 10Mbit/s Yes Cost orientation

More than 10Mbit/s Yes No margin squeeze

Greece Below 200Mbit/s Yes Cost orientation

Germany Less than 2Mbit/s No –

From 2 to 155Mbit/s Yes Cost orientation


Ireland Below 155Mbit/s Yes Cost orientation


Norway Below 8Mbit/s Yes Cost orientation

More than 8Mbit/s No -

Portugal Traditional interface (below

155Mbit/s)

Yes Cost orientation

Ethernet (below 1Gbit/s) Yes Retail minus

Spain Traditional interface (below

155Mbit/s)


Ethernet (below 1Gbit/s) Yes Retail minus

More than 1Gbit/s Yes Reasonable prices

UK Traditional interface (below

8Mbit/s)


Traditional interface (more

than 8Mbit/s, below

155Mbit/s)

Yes (except London) Cost orientation

Traditional interface (more

than 155Mbit/s)

No –

Ethernet below 1Gbit/s Yes Cost orientation

Ethernet more than 1Gbit/s N –

The regulation should also consider the implementation of geographical markets, as the costs of serving customers in less dense geographies is expected to be substantially higher.


Omantel believes that wholesale terminating segments of leased lines should be regulated on a cost basis up to a capacity of 155Mbit/s only. Higher speeds should not be regulated, and are subject to the considerations in market 15 mentioned below.


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5.8.4 Market 15: Wholesale trunk segments of leased lines

The market for wholesale trunk segments of leased lines involves providing high capacity transmission between the point of access of a requesting party and the trunk node of the providing party. It is our understanding that mobile backhaul services would be considered under this category.

Wholesale trunk segments of leased lines are not traditionally regulated, due to several reasons:

existence of effective alternatives for point-to-point connection, such as microwave

potential connectivity through alternative utilities providers (e.g. electricity, water, etc.)

the need to promote infrastructure investment in backbone capabilities to support redundancy across operators as well as national disaster recovery.

Indeed, our review of international benchmarks finds little evidence to support the regulation of connectivity between trunk nodes, where market dynamics have shown to be sufficient for the incumbent to provide attractive commercial terms.


Omantel does not agree with the proposed regulation for this market, and believes that wholesale trunk segments of leased lines should not be regulated.

5.8.5 Market 16: Wholesale IP international bandwidth capacity

Omantel notes that the wholesale IP international bandwidth capacity market is one where FBOs have made substantial investments to provide the needed capacity to the market, and where a more ‘light touch’ approach should be applied.



Omantel’s position Omantel’s suggested

change



bandwidth capacity Regulated service / FL LRIC

Not accepted Regulated / commercial

pricing

Access to landing stations Regulated service / FL LRIC Not accepted Not regulated

Access to earth stations Regulated service / FL LRIC Not accepted Not regulated

Regulation on access to wholesale IP international bandwidth capacity

The market for ‘wholesale IP international bandwidth capacity’ has developed well under the current regulatory framework. According to the TRA indicators, international bandwidth capacity in Oman has more than tripled in the last year, increasing from 27 263Mbit/s in Q4 2012 to 82 010Mbit/s in Q4 2013.


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Figure 5.7: International bandwidth capacity in Oman in Mbit/s [Source: TRA Oman, 2014]

Omantel notes that the positive market evolution is due to the current forward-looking regulatory approach that promotes infrastructure-based investment in IP international bandwidth capacity.

Investment in international capacity faces many of the risks previously discussed around uncertainty of demand and uncertainty of price. Typically, a significant step-wise investment is needed to provide additional capacity, with a risk on whether demand will continue to grow, which is a particular concern given that these cable systems are implemented based on forecasts that are three years old by the time the system is live.

As an example, Omantel deployed a 100Gbit/s link in the Musandam region, which is currently operating with a very low utilization and negative commercial viability as a result of the mentioned demand uncertainty. An open-access approach as proposed by the regulation would allow access seekers to purchase capacity from Omantel on a ‘pay-as-you-go’ basis with no risk, and at a cost-based price that reflects full capacity utilization, putting Omantel at significant commercial loss and disadvantage relative to the access seeker.

As outlined in real options theory, a more conservative approach for Omantel would be to wait until demand materializes before deploying the needed infrastructure. However, this would be detrimental to the regulatory objectives, as the lagging growth in capacity would lead to traffic congestion.

As opposed to the suggested regulation of cost-based open access, we propose working with industry parties to implement joint investment initiatives where risks and rewards are shared equally among the partners. We further note that this is a service that is rarely regulated, based on our review of international benchmarks.

Regulation on access to landing stations

Access to landing stations is typically provided through offering backhaul services to a cross-connect outside the landing station. That point is usually a node in the backbone network and is easy to reach by other operators. It could even be a point where the other operator is already present, which might mean that there is already a co-location arrangement in place.

82,01074,178

59,898

47,263

27,263

Q4 2012 Q1 2013

+201%

Q2 2013 Q3 2013 Q4 2013


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Our review of international benchmarks reveals limited regulation of access to submarine cable landing stations. Europe and the USA have generally promoted facilities-based competition on landing stations, with access to the facilities being subject to commercial agreement. For example, in Denmark many operators/submarine cable consortia have restricted access to the landing stations, but rather provide backhaul services to defined points of interconnection. The Netherlands presents another interesting example, where access seekers that bought indefeasible rights of use (IRU) in a submarine cable were allowed sharing of the landing station on a co-investment approach.

Omantel notes access to submarine cable landing stations should not be regulated in Oman due to the following considerations:

The landing station market has not been analyzed in the MDD report. The TRA has not

provided justification on why landing stations should be regulated, neither in the current regulation nor in the previously issued MDD report. In fact, the MDD report has little mention of landing stations, with the exception of a brief mention that it may be regulated under Market 12 (and not Market 16 as per the ongoing consultation).

The Telecom Act requires landing stations to provide ‘access to services’ not facilities.

Omantel further notes that the Telecom Act prescribes that landing station operators should allow licensees to ‘access its services’, with no mention of the requirement to provide access to facilities.

More specifically, the Telecom Act indicates:

“The operator of international telecommunications infrastructure for the international marine cable systems in the Sultanate shall allow the public telecommunications service licensees in the Sultanate to access its services” (46 repeated 2).

Access services (which it is not necessary to provide in the case of landing stations) are defined in the Act as:

“12 Repeated 3: Access Services: Access by a licensee to another licensee network with the intent of being able to provide telecommunication services including the connection of telecommunication equipment using wires or radio; and access to any infrastructure including buildings, towers and cable and wire ducts”.

Cost-based open access will lead to destroy the current submarine landing ecosystem -

Omantel has invested hundreds of millions of dollars in setting up a regional hub with11 submarine cable systems that land in Oman at five landing stations. The rollout of such a huge investment involved significant risk on the side of Omantel, as the demand for capacity is uncertain, and the potential supply is unregulated and potentially subject to massive increase of capacity through terrestrial and submarine routes. Open access to the landing station on a cost basis would allow access seekers to take up the service on a ‘slicing’ basis, leaving the investing party with the full risk of investment forever. This would dis-incentivize Omantel or any other investor to bring any international infrastructure into Oman, which is contrary to the Sultanate’s vision of becoming a regional economic. Contrary to the proposed cost-based open-access approach, Omantel supports an ‘equal cost’


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investment approach where access seekers are willing to share the investment and the risks of setting up a landing station equally.

Successful industry collaboration is already taking place on landing stations–Omantel and Nawras already have commercial agreements for investment in a submarine cable system, taking advantage of existing landing stations. This is primarily enabled by commercial agreement among the operators and a process of co-investment that allowed both parties to share the risks equally, unlike the proposed open-access model that allows access seekers a low price while at the same time leaving all the risk with the provider.

Access to facilities in Oman is not needed as the FBOs have exclusive cable rights.

Omantel notes that regulating access to submarine cable landing stations would be relevant in cases where an access seeker requires direct access to the landing station due to an IRU. The context in Oman is different, as the submarine cable capacity is exclusively owned by the owners of the landing station. As such, third parties purchasing capacity from Omantel or Nawras do not require access to the submarine landing stations, but simply a backhaul service to an agreed point of interconnection.

Based on this, Omantel notes that access to landing stations should not be regulated, as access to international bandwidth services will be provided by Omantel through backhaul services. Availability of such a backhaul service should not be a cause for concern for the TRA due to the availability of alternatives, as outlined in the response to Market 15 (wholesale trunk segments of leased lines).

Regulation on access to earth stations

Omantel notes that the demand for earth stations is limited, and regulation is neither justified nor likely to be beneficial, so market forces should be allowed to determine appropriate price levels.


Omantel recommends that access to landing stations should not be regulated as it is not relevant for delivering international capacity; or if regulated the only consideration should be for ensuring reasonable pricing for backhaul to the point of interconnection of the access seeker.

Omantel also believes that earth stations should not be regulated, while access to wholesale IP international capacity bandwidth should be regulated with pricing subject to commercial agreement.

5.9 Question 9 – Service Annex on national roaming services



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A ‘retail minus’ approach may place substantial constraints on the pricing approval for the retail arm of the business for the Dominant Operator. These constraints would limit the ability of the Dominant Operator to achieve an agile and timely response to changes in tariff structure by the competition, and would harm the market position of the operator.

We would further emphasize that new entrants are likely to leverage national roaming services mainly for low population density areas in the second and third years of roll-out. As such, we note that national roaming costs in years two and three would be well above the average cost of mobile call origination, and closer to the retail price, which should be taken into account in setting the regulated price of national roaming in years two and three.

As such, Omantel does not agree with the pricing methodology in the draft regulation, and notes that an approach that is based on commercial agreements is best suited for regulating national roaming services, with ex-post regulatory intervention if needed. The

commercial agreements would be broadly setup on a retail minus basis, but with flexibility in negotiating the exact terms and conditions that suit both parties, and avoid placing unnecessary obligations on retail pricing by the Providing Party. An approach based on commercial agreements is likely to be favorable for a potential third entrant, as the two existing MNOs would compete on offering attractive terms to acquire the wholesale business of the new entrant.

Such a setup would be monitored by the Authority through ex-post regulation in case no agreement is reached in a timely manner to ensure proper functioning of the market.


Omantel does not agree with the pricing methodology in the draft regulation, and recommends that mobile call origination for national roaming should be regulated, with pricing subject to commercial agreement.

5.10 Question 10 – Service Annex on MVNO access services

Do you support the obligations described in the draft service annex? If not, please provide, with explanation, a description of the amendments to this service annex which you believe would better reflect the Authority’s objective?

Omantel is deeply concerned at the proposed regulation of MVNO access services and price regulation, as this level of regulation is almost unprecedented. Mobile call origination for MVNOs is traditionally subject to commercial agreement among operators, with potential for regulatory intervention in case of a dispute.

We strongly believe that price regulation of MVNO call origination will be detrimental to the market, and could lead to the following negative consequences:

Opportunistic MVNO behavior can lead to substantial market value destruction – The

availability of cost-oriented access for MVNOs risks generating unintended consequences on


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competition. It could in fact discourage new investments in infrastructure by network operators (for example, in rural/high cost areas) and would create an incentive for candidate MVNOs to enter the market only for a short period of time, in which they could achieve good margins free of any risks related to investments. In other words, a cost-oriented access obligation could provide MVNOs with a clear incentive to generate high margins as opposed to investing in the country for the provision of telecom services in a ‘high value’ model (i.e. offering a better value to end users by means of new services, better content, etc.). This would lead to irreversible market damage, whose burden will be borne by the FBOs.

Higher scale operators will host most MVNOs– An approach considering mandated

regulatory pricing based on LRIC costs could potentially yield a different regulated price of mobile origination for the different operators, with a lower regulated price for larger operators that have more scale. As a result, MVNOs are likely to be concentrated with the largest operator(s) in the market.

MVNOs may drive out operators with scale lower than the largest operator– MVNOs that

are hosted on the operator with the greatest scale may benefit from lower origination cost than some of the other facilities-based MNOs. This competitive advantage may in turn be used by the MVNOs to aggressively target the smaller MNOs that have a smaller scale and a higher cost. A third facilities-based entrant in the market would be particularly vulnerable to competition from MVNOs, whose mobile origination cost is equal to that of the largest operator.

Omantel also notes that mobile call origination has been removed from the list of markets for ex-ante regulation by the EU Commission as well as other regulators globally, and there is no evidence that such a regulation would be in line with accepted regulatory practices. In fact, almost all benchmarked regulators did not mandate access to call origination for MVNOs, or impose price regulation.

Omantel acknowledges that facilitating entry for a full MVNO should be at more attractive commercial terms than for light MVNOs. As such, these terms would be directly negotiated with the MVNO at time of entry, as deemed feasible by both parties. The existence of market competition among the two FBOs for hosting the MVNOs would ensure the success of such commercial agreements.


Omantel does not agree with the pricing methodology in the draft regulation, and recommends that mobile call origination for MVNOs should not be regulated; or that if regulated, pricing should not be set by the regulator but be subject to commercial agreement.

5.11 Question 11 – Dispute resolution procedures

Do you support the Authority‟s proposed dispute resolution procedures as set out under Section 7.5 of the draft Regulation? If not, please set out your reasoning and explain why an alternative process would more closely match the Authority‟s objectives.


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Regarding the treatment of content providers, Omantel wishes to re-iterate its views that the scope of activities covered by this A&I regulation should be limited to telecom networks and services, and that in particular, any process for including content providers in the scope of this A&I regulation should include the relevant Ministries and governmental bodies, which have certain jurisdiction over content issues.

Omantel is supportive of the dispute resolution process set out by the TRA in the A&I regulation. Omantel is however doubtful whether the proposed process will necessarily result in a faster and cheaper resolution than previously.

In reference to point 7.5.13, we note that the costs of resolving a billing dispute through appointing a billing expert should also be borne equally by the parties, as is the case for the Mediation Procedure for other kinds of disputes.

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