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Telecommunications Regulatory Commission

Annual Report

2005

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Table of contents

HM King Abdullah’s Vision for the ICT Sector in Jordan A word from the CEO

Telecommunications Regulatory Commission o Vision and Mission. o Board of Commissioners. o Organizational Structure.

Executive Summery TRC Achievements in 2005

Liberalization of the Fixed Telecom Sub Sector o Licensing

New Licensing Regime. Issuance of Class and Individual Licenses.

o Regulation of the Telecom Sector Regulatory Framework for Universal Service Obligations. Interconnection Instructions. Consultation Papers:

• Safeguarding Fair Competition. • Financial Guarantees. • Industry data collection and publication Framework • Suggestions for Annual Licensing Fees. • Regulating of VoIP

Radio Frequency/Spectrum Regulation Regulation of the Postal Sector Regulation to Stimulate Competition in the Kingdom

o Customer Choice Mobile Number Portability. Carrier Selection and Pre-Selection. Consumer Affairs. Quality of Service. Pilot Projects. Pricing. Type Approvals. National Numbering Plan/National Numbering Record.

Human Resource Capacity Building o Participation in International Activities and Training Courses o Participation in Local Activities and Training Courses o Other Achievements.

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Events Hosted by the TRC in 2005

Regional Workshop on the Universal Access and Universal Services Policies.

Second Meeting of the Regional Arab Working Group for Women and ICT.

Main Events Attended by TRC

Supercomm Convention and Forum for Telecom

Service Providers and Operators. Meeting of the Arab ICT Network of Regulators

(ARNT).

TRC Plans for 2006

TRC Financial Statement

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Appendix 1: The ICT Sector in Jordan: Facts and Figures. Appendix 2: Telecom Companies Licensed in the Kingdom until the End of 2005.

Appendix 3: A program of licensing in compliance with government policy in the

ICT Sector and Postal Sector.

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HM King Abdullah’s Vision for the ICT Sector in Jordan

“we realize that private investment is the real engine for sustainable economic development. We have, therefore, adopted a course of action to encourage such investments

in key sectors of Jordan’s economy. This course includes legislation aimed at liberalizing these sectors

through privatization, proper regulation, and the guarantee of fair competition.”

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A Word from the CEO The role of the ICT sector in enhancing sustainable development in Jordan has expanded considerably in the last few years. Substantial steps have been taken in the legal and regulatory environment that will facilitate the realisation of the Royal vision for the ICT sector and the economy as a whole. Whilst this report provides an insight into the magnitude of the sector’s technical, economic and administrative achievements, it is also fully recognised that future success and growth of the sector is dependent on the TRC’s fulfilment of its responsibilities and obligations. Since our work at the TRC touches on all elements of the equation the challenge of the future is to maintain the equilibrium despite the obstacles that arise in the path of our progress. I believe that the achievements in helping to realise the Governments policy objectives for the Information and Communications Technology sector and Postal sector during 2005 have gained the admiration of local and international stakeholders alike. The full liberalization of the fixed telecom sector has already achieved some successes through the licensing of an alternative fixed network telecommunications service provider. This liberalisation program gradually gained strength throughout the year as a result of the determination, professionalism, transparency and openness to constructive criticism of those in charge of it, Therefore I believe that liberalisation is not the last of our achievements but rather a starting point from which effective competition in the Jordanian will evolve. This will lead the way to the creation of an advanced communications environment that will benefit Jordanian citizens and rises to meet the expectations of His majesty King Abdullah II Bin Al-Hussein.

……………………….. CEO

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Telecommunications Regulatory Commission

Establishment

The Telecommunications Regulatory Commission (TRC) was established by means of the Telecommunications Law No. 13 of the year 1995, as an independent governmental body tasked with regulating the telecommunications and information technology sectors.

In fulfilment of the provisions of the Temporary Postal Services Laws No. 5 of the year 2002 and its amendments, TRC started to take responsibility for regulating the postal sector in the Kingdom and monitoring all postal service providers and their compliance with the law.

Responsibilities

In accordance with the Telecommunications Law, TRC is tasked with “regulating the telecommunications and information technology services in the Kingdom in compliance with the stated general policy to guarantee the provision of high-standard ICT services to the end user at reasonable prices, and in such a manner as to ensure optimum performance in the ICT sector.”

The TRC performs its duties independently of the Ministry of Telecommunications and Information Technology, but in compliance with the general policy of the government, as stipulated in the Telecommunications Law.

As regards the TRC role in the postal sector, Article 9 of the Temporary Postal Services Laws and Regulations No. 5 of the year 2002 states that the TRC shall have the following duties and responsibilities:

1. Setting the basic criteria that the public postal service provider is obliged to observe when specifying the cost of the various services to the end user, to which services the provider has exclusive right, in accordance with Article 12 of the Law.

2. Issuing licenses to private postal service providers, in accordance with special regulations issued for this purpose which determine the licensing criteria, conditions and fees that the TRC collects.

3. Monitoring the execution of the terms of contract by the public postal service provider, and submitting a report of this to the Minister of Telecommunications and Information Technology within two months after the end of each fiscal year, or at any other time deemed appropriate by the TRC, appending its recommendations and suggestions in this regard.

4. Monitoring the implementation of this Law, investigating any perceived breach of the Law, and taking appropriate measures and actions, in accordance with the Law.

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Vision and Mission of the TRC

Vision

A telecommunications environment that is competitive, advanced, regulated and available to all.

Mission Statement

To ensure the availability of advanced and high quality Information and Communications Technology (ICT) services to all users at just, reasonable, and affordable prices by working with all stakeholders in an independent, open and transparent manner to create a regulatory environment that promotes fairness, competition and investment, thus assuring fulfilment of the Kingdom‘s long-term ICT needs.

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Board of Commissioners

Her Excellency Eng. Muna Nijem/ Chairman of the Board

From 1/11/2002 to 8/11/2005. Her resignation was accepted as of 8/11/2005. His Excellency Mamoun Balqar/ Deputy Chairman & Commissioner

From 1/11/2002 to date.

He was Acting CEO from 8/11/2005 to 18/3/2006.

His Excellency Mohammed Khasawneh/ Commissioner

From 1/11/2002 to date.

Her Excellency Masoun Shuqeir/ Commissioner From 22/5/2003 to date.

His Excellency Fadi Kawar/ Commissioner From 1/11/2002 to 23/2/2005.

His Excellency Muwaffaq Abu Aqola / Commissioner From 9/6/2005 to date (replaces Mr. Fadi Kawar).

The Council of Ministers issued a directive on 7 March 2006 appointing His Excellency Dr. Ahmad Hiasat as Chairman of the Board of Commissioners. He took

up this position on 19 March 2006.

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Organizational Structure

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Executive Summary

2005 has seen the most dynamic changes in the development of the Telecoms sector

since services where initially offered by Jordan Telecom in 19xx. These changes build

upon an established mandate for the reform of the sector as prescribed within the

September 2003 Statement of Government Policy for the Telecommunications, Postal and IT

sectors published by the Ministry of Telecommunications and Information Technology in

support of the temporary Telecommunications law of 2002 and the temporary Postal Law.

These pivotal documents helped to pave the way for the liberalisation of the

telecommunications and postal sectors, a process that is now well advanced.

This background of a dynamic market in which a vibrant competitive environment is being

created requires the development of a strong, decisive regulator. In the early stages of

competition development it is essential that ex-ante regulations are implemented to protect the

interests of new market entrants and the consumer. Overtime this can be replaced by ex-poste

regulations where by the TRC will be able to allow the markets to exert a degree of self

regulation within pre-defined boundaries. Recognising this, during 2005 the TRC, supported

by the amended Telecommunications Law (2002) and government policy (2003), embarked

upon a very ambitious and rich programme to develop the necessary instruments required to

achieve this regulatory model.

In developing such regulatory instrument and through demonstrating its independence the

TRC is in accord with internationally recognised best practise as stressed within both the

WTO and European agreement to which the Government of Jordan has become signatories.

Whilst the TRC did not complete this programme within 2005 as had been planned,

significant in-roads have been made into the development of the required instruments. At the

same time the TRC has needed to look inwardly at itself and has taken a number of measures

designed to build the necessary capacity within the staff retinue to be able to more

appropriately support the transformation required within the TRC itself. As such through the

USAID funded AMIR programme, which came to an end in December 2005, the TRC has

been able to put in place some of the foundation stones to develop the required capacity. Also

during 2005 a European Union funded four (4) years contract has also been awarded to

Eurostrategies. Work on the project began in June to provide regulatory support as well as to

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employ techniques designed to provide institutional strengthening and capacity building

within the TRC.

The efforts have marked several significant milestones in the history of the telecoms sector in

Jordan: the grant of the Individual license to Batelco heralds an opening of the fixed market

using high capacity wireless based technologies; the transition to Class Licenses for all

licensees not requiring the use of scarce resources and the progress made with the Individual

licensees, due to completed during early 2006, removes anomalies and unifies the licensing

environment; the publication of the Interconnection Guidelines as well as the consultations

including competitive safeguards, Spectrum licensing, Voice over IP, scarce resource and

pricing, quality of service and information collection and management will all further enhance

the stability of the regulatory environment and allow competition to flourish within the sector.

The promotion of competition is not just about liberalisation of the licensing regime, during

2005 significant inroads have also been made into the development of consumer choice.

Through a process of cooperation between the licensees and the coordination of the TRC two

significant changes to the competitive landscape are being developed that will allow the

consumer a greater level of choice in how and from which company they purchase services.

Carrier Selection (and carrier pre-selection) as well as Mobile Number Portability will allow

the user to choose which of a number of companies will provide international call services

without having to change the primary service provider; number portability will allow users of

mobile services to change mobile operator without having to change telephone number.

Internationally both of these capabilities have been proven to increase competition and bring

significant benefits to the consumer. Both of these services should become operational during

the 1st half of 2006.

Transformation of the regulator is an ongoing process and 2006 will witness the completion

of the programme to develop the necessary regulatory instruments initiated in 2005 as well as

additional institutional strengthening of, and capacity building within the TRC. These actions

will ensure that the TRC maintains its ability to effectively and efficiency regulate in an

increasingly complex and dynamic market and protects the interests of the Jordanian

consumer.

Consequently the TRC is committed to the ongoing transformation of the sector in support of

stated Government policy as well as the requirements of the National Agenda and to complete

during 2006 the programme of regulatory development initiated at the beginning of 2005.

Furthermore it is committed to making the required transformations within its organisation to

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ensure that there is sufficient institutional strength and capacity to be able to enforce the

regulatory environment created with expediency in a non-discriminatory, consistent fashion

thereby enabling growth within the sector and the accrual of increasing benefits to the

Jordanian consumer

.

Based on the above, the TRC is committed to: the growth of the sector in accordance with both the Statement of Government Policy on the Information & Communications Technology Sectors & Postal Sector and the National Agenda;.and to complete all the regulatory measures started in 2005 and due to be completed this year.

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TRC Achievements in 2005

Liberalization of the Fixed Telecom Sub Sector

Licensing

New Licensing Regime

During 2005 the TRC established the fixed telecommunications sub-sector liberalisation programme in accordance with the goals set by the Statement of Government Policy on the Information & Communications Technology Sectors & Postal Sector of September 2003. The introduction of a unified licensing and regulatory framework increases the opportunity for licensees to offer a broader range of services including international and local voice services. Two types of licence have been created. An individual license for public telecommunications services providers who require the use of scarce resources such as radio frequency spectrum; public rights of way; and telephone numbers from the national numbering plan. A class license has also been created public telecommunications services providers who do not need to directly make use of such scarce resources.

One of the main motives for the adoption of the liberalisation programme is to create opportunities for the private sector to invest in the sector and thereby: increase the usage of available national assets; provide citizens with a variety of advanced telecommunications services; to enhance the availability and choice of diverse services to all; and to increase the Quality of Service offered by service providers.

During 2005 the TRC initiated the license transition process in two phases. In the initially phase all 26 of the former class licensees were transitioned to the new class license regime. This will allow them in a technology neutral way to expand the limits of the services offered. The second phase followed a notification and a general consultation paper related to the transfer of non-class licensees to the new form of individual license. It is worth mentioning that TRC anticipates the transition to be completed by the end of 2006.

Issuance of Class and Individual Licenses

During 2005, five companies submitted requests for individual licenses, and 22 applied for class licenses. The applications were considered by expert TRC panels from all technical and administrative aspects.

On 11 May 2005, Batelco-Jordan was granted an individual license to offer fixed telecom services in competition with Jordan Telecom. Moreover, nine companies were granted class licenses to offer various fixed services that include Voice-over IP (VOIP) and international calls. It is expected that in 2006 additional class and individual licenses will be granted to companies that complete the requirements in accordance with the regulations.

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Regulation of the Telecom Sector

• Regulatory Framework for Universal Service Obligations

On 14 July 2005, the TRC sent the draft of the Universal Service Obligations Regulatory to all companies working in the telecom sector in Jordan and other stakeholders for review. Their feedback and comments will be taken into consideration when preparing the final draft to be submitted to the TRC Board of Commissioners for approval.

This framework deals with issues related to the selection of universal service providers from the licensed operators, specification of the criteria according to which universal services will be provided, determination the licensed operators that are required to contribute to the Universal Service Fund, calculation of the universal service cost, specification of the amount of contributions required to the USF, access to the service by the disabled, and funding the introduction of private payphones.

The importance of this regulatory framework stems from the social and economic need to provide affordable and accessible communications services to all segments of Jordanian society. This framework aims at expanding capacity and availability especially within less well developed areas so that all segments of society have access to basic telecom services and to ensure that all communities throughout the Kingdom are able to contribute to the country’s economic and social development.

Interconnection Regulations Interconnection can be considered as the most important issue in regulating the telecom market. Its role is to: facilitate competition between service providers; reduce the cost of inter-operator telecom services; increase operator efficiency, and encouraging investment in the ICT and other sectors. The following has been achieved in this regard:

1. Adoption of new interconnection regulations issued on 1 May 2005 and published on TRC website. http://www.trc.gov.jo

2. Rate approval of interconnection services provided between the telecom service providers for the period ( 1/7/2004 till 30/6/2005)

3. Approval of a number of interconnection agreements between telecom service providers.

Consultation Papers The TRC has adopted the practice of issuing consultation papers to interested parties and stakeholders prior to the finalization of rules and regulations. This serves to increase general confidence and encourage the establishments of the principles of partnership and openness between the TRC and the telecom service providers and their customers.

The TRC has published a number of consultation papers, granting enough time to the licensees and concerned parties in the sector to study these papers and to provide

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feedback and comments. Such feedback and comments are taken into consideration when the final versions of relevant regulations are drafted.

1. Competition Safeguard Instructions

In the framework of the obligations stipulated in the Telecom Law, and in the course of TRC’s execution of Clause (E) of Article (6) of the Telecom Law No. (13) for the year 1995 and its amendments, it is incumbent upon TRC to stimulate competition in the ICT sector based on market factors, to regulate the sector in a way that guarantees its efficiency in providing ICT services, to verify that its regulations are sufficient and effective in preventing or ameliorating the effects of illegal competition, to prevent abuse by any party of its dominant position in the market and to take necessary actions for this purpose. In July 2005, the TRC published a consultation paper in this regard entitled “Notice Requesting Comments on the Development of Instructions on Competition Safeguards in the Telecom Sector.” Six companies (Fast Link, MobileCom, Jordan Telecom, Umniah, XPress, and Batelco-Jordan) have furnished their feedback and comments. It is expected to issue the regulations on safeguarding fair competition at the beginning of 2006. Within the same framework, a draft memorandum of understanding was prepared between TRC and the Department of Competition at the Ministry of Trade and Industry to safeguard and foster fair competition in the telecom sector and to co-ordinate the work of both parties especially regarding contentious issues. It is expected that the memorandum will be signed in the second quarter of 2006.

2. Financial Guarantees Financial guarantees are made by the telecom service providers to safeguard the rights of the users in cases of cessation of service due to: revocation of a license; bankruptcy; or any other reason. The regulations in this regard aim at protecting the users of telecom services, in accordance with Clause (D) of Article (29) of the Telecom Law. TRC issued a consultation paper in 19 October 2005 entitled “Notice Requesting Comments on Financial Guarantees”, and published it on its website. Feedback and comments were received from the stakeholders (Jordan Telecom, Fast Link, MobileCom, Umniah, Jomotel, Batelco-Jordan, XPress, Al-Thabet Company for Telecommunications & Electronics). The regulations regarding financial guarantees are expected to be issued in 2006.

3. industry data collection and publication Framework In 19 October 2005, TRC published a consultation paper regarding the organisational framework for collection and publication of data related to telecom sector entitled “Industry Data Collection and Publication Framework” Comments and feedback were received from five service providers (Fast Link, MobileCom, Jordan Telecom, Umniah, and XPress). Comments and reply comments were published on the TRC Website in 24 November 2005. All interested parties were awarded an extra time to give their comments regarding the received feedback until 5/12/2006.

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The purpose of issuing this consultation paper is to develop the information that TRC collects from the telecom companies and to propose suggestions to improve the structure and content of the questionnaires that TRC sends out for completion on a quarterly or annual basis. This paper aims to keep the licensed companies aware of the information and patterns, which TRC is going to assemble, to give their opinion in this regard. After the TRC finish this consultation, the regulations regarding collection and publication of telecom data are expected to be published at the beginning of 2006.

4. Suggestions for Annual License Fees The annual license fees are one of TRC’s main sources of revenue. TRC has drafted suggestions for new regulations concerning annual license fees to be published for general consultation. The purposes of suggesting these modifications are as follows:

To overcome some discrepancies in the current licensing agreements to ensure a fair and equitable system across the board.

To assure proper and practical calculation of annual license fees. To ensure that the annual license fees cover TRC expenses, excluding expenses incurred from regulation of the spectrum management and postal sector. The TRC suggests through the consultation paper to amend the definition of the licensing annual fees, to comply with the new individual licenses definition and unify the new definition by implementing it on all Licensees. The TRC is in process of issuing regulations on annual licensing fees, which is expected to be published for general consultation in the fourth quarter of 2006.

5. Regulation of VoIP For the purpose of setting a transparent regulating basis for this service, and in co-operation with all the parties working in the telecom sector, TRC has published a general consultation paper on the VoIP service in 9 May 2005. The notes received from service providers will help TRC formulate the appropriate regulations, with a special focus on adopting certain criteria to protect the users’ interests. It is worth mentioning that the new licensing Regime enables the licensees to offer a wide variety of services and to select the best technology for these services. Radio Frequency/Spectrum Regulation The Department of Radio Spectrum Management at TRC witnessed a busy year in 2005. for limiting exposure to electromagnetic fields (Radio Frequency Safety Regulations) were prepared and put into operation; the draft of the National Spectrum Allocation Register was prepared; the Automated Radio Spectrum Project was in the final stages; the registration of the primary plan of the digital radio and television broadcasting frequencies with the ITU was completed; the proposed project of establishing a research and study team specialized in radio communications in co-

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operation with national research centres, particularly at Jordanian universities, was taken close to completion; the spectrum tariff for radio and television broadcasting frequencies were set and brought into operation. TRC has also prepared and set the procedures and instructions for licensing the frequencies of radio communications systems related to the integrated licensing regime. In the field of technical studies for applications related to frequency licensing, TRC has: • studied and issued 620 licensing requests, renewals and modifications of

frequency licenses for private radio networks and stations; • studied 67 applications for radio communications equipment using “spread

spectrum” technology and issued the relevant technical type approvals; • studied 31 applications for low-power radio communications equipment and

issued the relevant type approvals; • studied 39 applications for technical approval of radio stations and issued their

relevant type approvals; • conducted (7) technical studies for applications to license broad-band radio

systems utilizing WiMAX technology; • studied 18 applications for FM radio stations, of which 13 were approved; • conducted technical studies to establish 623 radio sites for public telecom services

and issued its relevant technical approvals; • conducted technical studies to establish and license 811 radio relay links for

public telecom service providers and issued its relevant technical approvals; • conducted technical studies to renew and modify 1,797 radio relay link licenses

for public telecom service; and issued its technical approvals • Conducted technical studies for (6) applications for VSAT stations. And issued

their relevant licenses

TRC has facilitated the mission of international news agencies by granting approvals to admit portable broadcasting stations (SNGs) to cover major events and activities, and performed a technical study to license satellite television broadcasting stations. It also performed a technical study and granted approvals to execute (7) radio pilot projects to test new radio communications Technologies in Jordan, including WiMAX Technology.

The Department of Radio Spectrum Management at TRC has conducted inspections on 1,530 licensed radio sites and updated the National Radio Spectrum Register accordingly. TRC was able to discover and seize 43 unlicensed radio stations. It also conducted field checks of all complaints received from licensees and citizens alike about interference, distortion, general safety, and problems of coverage. TRC conducted field checks in all regions of the Kingdom to test the coverage of the new licensee (Umniah). It also conducted Field measures related to spectrum safety complaints received by TRC from costumers, and ensure the commitment of all licensed operators regarding the Radio Frequency Safety Regulations.

Internationally, TRC registered 1,200 base stations with the ITU to protect them, and co-ordinated the GSM frequencies at joint borders with neighbouring countries. It also followed-up the coordination of radio and television frequencies as well as mobile radio frequencies (radio trunking) with neighbouring countries, and coordinated with

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Arabic countries issues of mutual recognition and unification of technical type approvals for radio stations. Preparations were made to take part in the ITU World Radio Communications Conference (WRC07). Regulation of the Postal Sector In the field of regulating the postal sector in Jordan, TRC performed the following in the year 2005:

1. Granted four licenses to private post operators in accordance with the Private Postal Operator Licensing By – law No. (110) for the year 2004:

• Private Postal Operator license / International Grade License

1. ARAMEX 2. UPS 3. DHL

• Private Postal Operator License / domestic Grade License 1. D&C ( Delivery & Collection Company)

2. Observed the implementation of the Temporary Postal Services Law No. (5) for the year 2002, by monitoring all postal services providers and their commitment to the text of the Law in that all the postal service providers are to be licensed by TRC in accordance with the Private Postal Operator Licensing By- law No. (110) for the year 2004. A number of operators had corrected their situations in the year 2005, and the TRC issued 4 licenses in accordance with the provisions of the above regulation.

3. 4. As TRC is the authorized body that monitors the implementation of the terms

of the performance contract by the public postal operator, as per Clause (C) of Article (9) of the Temporary Postal Services Law No. (5) for the year 2002 and its amendments, it has participated in amending and drafting a new performance contract on 22 August 2005, in co-operation with the Ministry of Telecommunications and Information Technology.

5. Monitored the public postal operator’s implementation of the performance

contract terms through field trips to gauge the performance of the company and assize important aspects of its work, such as internal procedures and handling of postal parcels. The TRC is also tasked with: studying the semi- annual reports submitted by the company and comparing the performance with the stipulations of the performance contract and the annual plan; and submitting periodical reports to the Ministry of Telecommunications and Information Technology, in addition to an annual report on Jordan Post performance.

6. At the end of 2005, TRC assisted the Ministry of Telecommunications and

Information Technology with the study and revision of the studies concerning the preparation for a project known as “Universal Postal Service in Jordan”. The studies included definition of universal postal service, the postal services

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it comprises, the cost of providing such postal services and the approved mechanisms for finance, the suitable legal framework for bringing the project into being, and specification of the future role of TRC in the regulation of universal postal services.

7. Participated with the Ministry of Telecommunications and Information

Technology and Jordan Post in preparing a draft of a comprehensive and adaptable by- law of procedures for monitoring and checking postal items and confiscating items contravening the terms of the regulations.

• Regulation to Stimulate Competition Customer Choice

• Mobile Number Portability Mobile Number Portability enables mobile subscribers to change the service provider without having to change their numbers. Moreover, this gives them the chance to benefit from the offers and services provided by other service providers, stimulating competition in the mobile telecom sector, leading to even higher quality services at affordable prices and driving more growth in the telecom market. On 5 January 2005, and after rigorous consultations with all concerned parties and stakeholders in the telecom market, TRC ratified the Instructions for implementing Mobile Number Portability and approved the accompanying explanatory memo and the Terms of Reference to establish an Industry Forum to supervise the implementation of the Mobile Number Portability in Jordan. The Forum was formed from the TRC and the concerned telecom companies and is composed of a steering committee and three working groups: technical; commercial; legal, and media and public relations. The program is expected to come into operation in the second half of 2006.

• Carrier Selection and Carrier Pre-Selection

On 24 March 2005, and after rigorous consultations with all concerned parties and stakeholders in the telecom market, TRC ratified the Instructions for implementing Carrier Selection and Carrier Pre-Selection and approved the accompanying explanatory memo and the Terms of Reference to establish an industry forum to supervise the implementation of the Carrier Selection and Carrier Pre-Selection in Jordan. The forum was formed from the TRC and the concerned telecom companies and is composed of a steering committee and two working groups: technical and commercial. The program is expected to come into operation in the second half of 2006. The first phase of the program was completed on 24 August 2005. This established the arrangements to select the operator using a separate bill and making it available to service providers. Also the appropriate access codes were allocated to potential service providers.

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Implementation of Carrier Selection and Carrier Pre-selection will enable the telecom service users (fixed and mobile) to select their carrier for their international calls (voice, fax), based on Quality of Service and cost.

• Consumer affairs The consumer affairs Section dealt with a total of 166 cases of complaint in 2005, compared to only 36 cases in 2004, an increase of 361%. Complaints submitted to TRC were registered and classified in electronic format into a database. TRC also formulated draft instructions regarding complaints receiving and handling.

• Quality of Service

TRC conducted studies on the experience of developed countries in the field of quality of service for different telecom services (international best practices), the best of these practices will be applied to the Jordanian market. These best practises were the foundation for the consultation paper entitled “Notice Requesting Comments on the Quality of Service Framework” issued on 15 June 2005 on the TRC website to enable all interested parties and give them the opportunity to express their opinions towards any point mentioned in this paper according to the transparency principle, which the TRC follows. Within the consultation paper, the TRC also proposed a list of Key Performance Indicators to be adopted in the Quality of Service Framework. As a consequence to the comments received from the stakeholders that responded to the consultation paper the list was amended. The services targeted by these Indicators are:

o Public Switched Telephone Network ( Fixed Telephony Services) o Public Mobile Services (Voice and SMS) o Internet Access Services (dial-up & broadband). o Trunked Radio Dispatch Services (trunking). o Leased Lines Services.

The final version of the “Instructions for Implementing the Quality of Service Framework in Jordan” and the final version of the accompanying “Explanatory Memorandum on the Quality of Service Framework", which explains and accompanies the Instructions for the implementation of the Quality of Service Framework have been prepared for submission for approval to the TRC Board of Commissioners to be published on the TRC website.

• Pilot Projects

In order to approve the launch of new services, TRC participated in several pilot projects in the telecom sector in jordan, including: geographical positioning service by satellites, and push-button or push-to-talk (P2T) service.

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• Pricing

In 2005, TRC reviewed a number of retail service prices proposed by Jordan Telecom, including:

1. Amending telegram tariffs. 2. Amending tariffs on outgoing international calls to Iraq. 3. Pricing of double-play service. 4. Pricing access to FLAG services. 5. PSTN Price Amendments

In implementation of TRC’s role in the strategic plan for the ICT and postal sectors, calculations were made of the values of economic indicators related to these sectors. These indicators included the average change in real prices of outgoing calls from a fixed network and from a mobile network in two periods: March 2004 and June 2005. A number of comparisons with Arab countries regarding the availability of multiple options for telecom service users, service subscription fees, monthly subscription fees, and price of calls made on the same network were also made. These indicators demonstrated Jordan’s advanced position in the ICT and postal sectors vis-à-vis these Arab countries and the sound status of the competition environment enjoyed by Jordan. TRC also began to prepare customer satisfaction surveys for the various telecom services on offer. • Type Approvals Article 6/L of the Telecom Law tasked TRC "To grant Type Approvals and to regulate the importation and usage of Telecommunication Terminal Equipment required for individual and private uses, or for use in specific zones, and to monitor such usage.” Telecommunication Terminal equipment includes; all Type of corded and cordless telephone sets, Fax machines, PABXs, GSM Terminal Equipment, etc. In fulfilling its obligations under Article 48/A of the Telecom Law, and in accordance with TRC policies in facilitating procedures for obtaining Type Approvals to admit Telecommunication Terminal Equipment in the Kingdom and minimise the burdens on citizens and investors, TRC has performed the following:

1. Updated Terms, Conditions and Procedures for obtaining Type Approval for Telecommunications Terminal Equipment, translated them to English and published them on its website.

2. Set Terms, Conditions and Procedures for obtaining Type Approval for Telecommunications Terminal Equipment Supporting Voice over Internet Protocols (VoIP), translated them to English and published them on its website.

3. Set Terms, Conditions and Procedures for obtaining temporary approval for Wired Telecommunications equipment.

TRC issued 2,907 type approvals in 2005. The following table illustrates the number of approvals by month:

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Month No. of approvalsJanuary 174

February 233 March 281 April 219 May 395 June 302 July 235

August 246 September 217

October 318 November 141 December 146

The Standards and Type Approvals Section at TRC has also tested a total of 200 devices in 2005, as shown in the following table:

Month Fax Cordless telephone

Corded telephone

Other devices No. of devices

January 0 2 1 0 3 February 0 2 3 0 5 March 10 1 2 0 13 April 16 3 4 3 video

phones26

May 5 3 6 0 14 June 3 27 6 0 36 July 4 21 22 5 IP & key

phones 52

August 1 14 2 0 17 September 5 0 3 0 8

October 1 4 4 0 9 November 2 3 2 0 7 December 0 7 3 0 10

Total 47 87 58 8 200

Accordance to Article 6/k of the Telecom Law tasked TRC " To establish technical rules and standards for the connection of wire Line or wireless equipment, including Telecommunication Terminal Equipment with the Public Telecommunication Networks and to set the regulation procedures for importing such equipment into the Kingdom, taking into consideration the bases prescribed in the prevailing Standards and Metrology Law". In this regard, the TRC completed the following:

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1. Updated the Standards and Technical Specifications for Telecommunication Terminal Equipment.

2. Defined the Technical Specifications for VoIP Telecom Terminal Equipment (VoIP TE).

• National Numbering Plan/National Numbering Record The National Numbering Record is a database that contains the numbering blocks, short numbers and access codes that are allocated, and the name of companies they are assigned to. The database has been updated by adding new numbering blocks of National/ International Signalling Port Codes that used for Operators Switches, in addition to updating all data available based on allocation and reservation of number groups. A bulletin was issued describing the National Numbering Plan and highlighting its significance, in addition to giving details about its features in terms of the classes of the numbers, their characteristics and the services associated with them. The final phase of the implementation of the National Numbering Plan, as approved by the TRC Board of Commissioners in March 2004, was completed on 14 January 2005 by adding an extra digit (eighth) to all mobile numbers and unifying telecom codes (with the pre-code “07”).

This measure aims to increase the capacity of the mobile telecom networks to meet the ever expanding demand for mobile services and to ensure the allocation of numbers to these services and their providers in a transparent and equitable manner.

The TRC also allocated numbering groups to a number of Premium Rate Service providers, which allowed the provision of new services in areas like entertainment, games of chance, sports, etc. It is noteworthy that the number of companies that offer Premium Rate Services reached 24, with 46 allocated numbering blocks.

• Human Resources Capacity Building

• Training and Participation in International & Local Events

TRC is keen to adopt the latest management know-how and techniques and to encourage employee participation in the development of institutional capacity. Therefore, the TRC has established and implemented training plans and programs to ensure an advanced individual and institutional performance as indicated in the table below:

Participation in International Events & Training Courses

Event

Country

No. of Participants

Global Symposium for Regulators (GSR) Tunisia 2 Middle East and North Africa Satellite Summit 2005

(MENASAT 2005) Dubai 2

24

Regional Workshop on Wireless Solutions for Universal Access/Universal Services

Sudan 1

Workshop on Market Opening Strategy Greece 1 Egypt International Economic Forum Egypt 1

Workshop on Regulation & Telecom Law in the Middle East

Bahrain 2

Workshop on VoIP Technology & SIP Protocol Egypt 2 International Telecommunications Union (ITU-B) Board

Meeting 2005 Geneva 2

13th Annual Meeting of Arab Network for Human Resources Management & Development

Bahrain 1

Frequency coordination meeting Egypt 2 6th Meeting of Task Group 1/8 on Compatibility between

(UWB) and Radio Communication Services Geneva 1

Working Group Meeting on Monitoring the Frequency Spectrum

Geneva 1

Workshop on Digital Television Broadcasting (RRC-06) Syria 3 8th Meeting of the Permanent Arab Working Group on

the Frequency Spectrum Syria 4

1st Arab Conference on Internal Auditing in the Scope of Company Governance

Egypt 1

Regional Workshop “Development of Competition Policies and Strategies for the Telecom Sector”

Morocco 1

Excellence in Automated Indexing: International Mark Standards

Tunisia 1

ITU Telecom Americas 2005 Conference Brazil 1 Workshop on Modern Trends in Telecom Policies Egypt 1

ARABCOM 2005 Conference Tunisia 1 Capacity Building in the Field of Information

Community Measurement Lebanon 1

3rd Meeting of the General Assembly of the Network of Arab ICT Regulatory Commissions

Egypt 2

3rd Meeting of the General Assembly of the Arab Centre of Excellence

Egypt 2

Regional Symposium “Fixed and Mobile Convergence and New Designs for Networks in the Arab Region”

Tunisia 1

Telecom World in the Middle East Conference 2005 Dubai 1 Workshop on Mobile Communications and Fixed Line

Convergence Ukraine 1

GSM Middle East Gulf & North Africa Dubai 1 Regional Workshop on Safety and Security on the

Internet and Networks Syria 5

Conference on GSM/GPRS and 3G Performance Hungary 1 Hanover International Telecom Exhibition (Cebit 2005) Germany 1

25

Interconnection and Price Regulation Oman 1 Conference on Interconnection Czech Republic 1

Preliminary Conference on Development of Telecommunications in the Arab Region

Algeria 1

International Forum “Telecommunications in the 21st Century”

UK 1

Guidance on the Transfer from Current Mobile Networks to the New Generation of International

Telecommunications

Syria 1

Third Study Committee of the ITU USA 1 1st Meeting of the International Planning Group Switzerland 3

Workshop on the Opportunities and Challenges of Universal Services

Egypt 1

7th Meeting of the Permanent Arab Working Group on the Frequency Spectrum

Abu Dhabi 4

Bit-Stream Unbundling, Regulation of Fixed Line, Regulation of Mobile Markets, Regulation of Broadband

Markets

France 2

Forum on Management of IT Services Dubai 1 Financial Integrity and Fraud Prevention Dubai 1

Total 65

Participation in Local Events

Event No. of Participants

Workshop on Methods of Investigation and Interrogation in Competition Cases

2

Seminar entitled “Towards a Real Partnership in Statistical Work” 1 1st National Conference on Competition 2

5th Jordanian Quality Conference: Commitment to Quality Enhances Investment

1

Regional Workshop on MPLS Technology and Applications 5 Telecom Convergence Conference 2005 1

Seminar on Information Security in Electronic Gateways 2 Environment Awareness Workshop 1

Dealing with and Supervising Accounting Systems 1 Applications of the Social Security Law 1

Total 17

26

Local Training Courses

Event No. of ParticipantsInformation Security Management 2

Purchasing and Stock Management Using Computers 2 New Trends in Stock Management 1

Creative and Distinctive Methods in Governmental Accounting

1

Certified Ethical Hacker 1 Oracle 10g DBA Track 1

Basics of Internal Auditing 1 Modern Methods of Supervision and Auditing, and Methods

of Uncover Deceit, Manipulation and Fraud 2

CMA 2 CCNA Training Programme 1

Wireless Technology Seminar 2 Essentials of GSM: Theory & Practice 2

Jordanian Legislations and Laws on the Practice of Legal Accounting

5

Public Participation in the Regulatory Process 19 Excellence in Government Management 20

Electronic Secretarial Work and Office Management 5 Management Decisions and their Importance in General

Administration 2

English Language 6

Electronic Saving and Indexing of Documents, Files and Archives

3

Management of Public Relations and Customer Service Offices

6

Optical Fiber Telecommunications 1 Maintenance of Office Equipment 1

Strategic Planning of Human Resources 1 Practical Applications of the Legislations and Laws

Regulating Accounting and Auditing 3

Total 91 Other Activities

• Enhancement of positive competition between TRC departments by spreading

awareness of the concepts of excellence in performance, quality, creativity, and the requisite organizational values through implementing the department of excellence programme, and the announcement of the Technical Department as the department of excellence for the year 2005.

27

• Work on effective and transparent documentation of the work procedures in

all TRC departments was continued.

• Promotion of team work and exchange of distinguished experiences and expertise between the different departments.

• Holding specialized training courses for university students.

• Implementation of the best international practices with regards to internal

auditing, including adopting the general framework of the internal auditing process at TRC, and preparing the annual auditing plan based on the Risk-Based Model, and prepare and adopting audit programs.

28

Major Events Hosted by TRC

Regional Workshop ( Universal Access and Universal Service Policies)

This workshop was convened in the period 7-9 February 2005 and was organized by TRC in co-operation with the ITU/Arab Centre of Excellence. Participants hailed from Tunisia, Saudi Arabia, Oman, Egypt, Palestine, Sudan, Iraq, Yemen and Jordan. Day one of the workshop included a number of lectures focused on universal service policies and access and regulatory aspects presented by a number of experts from international and consultative organizations and institutions. It also featured lectures on Universal Service Policies in Jordan, and included an open session titled “developing an enabling regulatory environment that achieves universal service”, in which a number of international experts took part. A representative of the incumbent provider in Jordan also took part.

Day two of the workshop focused on the financial and economic options of universal services and access, and also the ITU model for universal service Fund policies and procedures. It was presented by the former President of the Commonwealth Telecommunications Organization David Souter. The day also included other aspects of Universal Access and Universal Service, such as the role of mobile telecommunications in resolving the problem of universal access, local community communication centres, and Jordan’s experience in this field.

Day three saw a discussion of the Jordanian initiative regarding knowledge-based society and the requisite educational reforms to achieve the knowledge economy. It also included an open session to discuss other countries’ experiences in achieving and enhancing universal services and access.

In the closing session, the participants expressed their gratitude to ITU, TRC and the Arab Centre of Excellence for holding the workshop. Moreover, they extended their thanks to all lecturers and sponsors of the workshop. Also a letter of appreciation was addressed to His Majesty King Abdullah II for hosting and embracing the workshop in Jordan.

29

Second Meeting of the Regional Arab Working Group for Women and ICT

The second meeting of the Regional Arab Working Group for Women and ICT was held under the Patronage of HM Queen Rania Al-Abdullah in the period 19-20 June 2005, with participation of representatives from UAE, Bahrain, Syria, Egypt, Palestine and Jordan, and representatives of ITU/Arab Regional Office, ESCWA, UNIFEM, in addition to the Associate Secretary General/Chairman of Social Affairs Sector in the Arab League. The convening of this meeting in Amman comes in implementation of the recommendations endorsed at the Group’s first meeting in Cairo in the period 19-20 April 2005, in which Jordan was unanimously selected to head the Group in the first year. The Regional Arab Working Group for Women and ICT was formed following the Regional Forum of Women and ICT convened in Cairo on 17-19/3/2003 under the umbrella of the Arab Association of Women, with the aim of coordinating the preparation of a mechanism to implement the declaration of principles of the World Summit of the Information Society convened in Geneva in December 2003 and preparations for the Tunis Summit in 2005.

The meeting discussed the Arab Women’s Organization report regarding the measures that it took in order to participate in activities held in parallel to the World Summit on Information Society which would be held in Tunis in the end of 2005. It also discussed a number of projects related to the development of women in telecommunications and information technology such as the Arab Women electronic shopping project, the Arab women database project, the Arab Women Distant Learning Academy project, and the distant learning by satellite project.

It is worth mentioning that the Working Group aims at endorsing recommendations regarding women and ICT to the Arab Telecom Council of Ministers to be added to the recommendations that will be forwarded to the World Summit of the Information Society (WSIS) that will be convened in Tunisia in 2005. In addition, discussion covered the vital issue of increasing the contribution of the ICT sector to stimulate the role of women in education, business and investment, and provide service for old people and those who have special needs, as well as increasing the participation of woman in the sector on all levels, as a student, a worker, and in the intermediate management, in addition in leadership positions.

30

Main Events Attended by TRC Supercomm Convention and Forum for Telecom Service Providers &

Operators TRC headed the Jordanian delegation that participated in the Supercomm Convention and Forum convened in the USA in the period 6-9 June 2005. Many international telecom companies took part in this event, where state-of-the-art items in telecom technology were on display. The Jordanian delegation consisted of representatives of a number of companies and corporations working in the ICT sector in Jordan. TRC participated in the workshop “The Other Four Billion: Telecom in Emerging Nations”; the focus was on TRC’s role in organizing the telecom sector, in addition to focusing on the importance of wireless telecom and the latest technologies in this field. A number of international telecom officers took part in this workshop. It is worth mentioning that the Convention was organized by the Telecommunications Industry Association.

The Meeting of the Arab ICT Network of Regulators

Working in its capacity as Chairman of the Arab ICT Network of Regulators (ARNT), TRC called on the Network members to participate in the third meeting of the General Assembly in Egypt in the period 2-3 March 2005, an agreement has been reached – throughout the meeting of the participants in which representatives of 11 Commissions or/ National Regulatory Authorities (NRA) and information technology regulating the ICT sector in Arab countries - and to address ITU to file an application to register the Network as a sector member. Two working groups were formed to activate the role of the Network at the international level: one tasked with following up on preparations for World Summit of the Information Society, the other for the International Convention of Telecom Regulatory Commissions (GRS). During the meeting, a synopsis of the Network strategic plan was presented by Jordan. Work plans and programs for all projects of the strategic plan were reviewed. Work plans were approved. The TRC was tasked with supervising the publication of a dictionary of technical terms, and was assigned to head the projects to prepare the general framework for interconnection, and to prepare the general framework for settling disputes.

Jordan was appointed as the general coordinator of the project to prepare the general framework of the sector’s policies and regulations, under which are subsumed a number of technical and organizational projects.

31

TRC Plans for 2006 Instructions for implementing Mobile Number Portability in Jordan

By implementing these instructions, users of mobile phone services would be able to change the mobile service provider without having to change their mobile phone numbers. It is expected that this service would become available in the second half of 2006. Interconnection fees

Work will be done to specify interconnection fees of certain services provided by licensed companies in accordance with interconnect instructions, in addition to specifying and ratifying the interconnection fees between telecom companies in accordance with the (TSLRIC+) protocol, as opposed to currently used (FAC) protocol. Modification of the National Numbering Plan and Updating Instructions

on Allocation and Reservation of Capacities and Digital Codes The National Numbering Plan is considered the organizational framework that specifies numbering codes and capacities used in providing telecom services in a way that fosters competition in the Jordanian telecom sector, as these numbers articulates the nature of these services or its area. TRC will make necessary modifications in the National Numbering Plan and will update instructions on allocation and reservation of capacities and digital codes to keep pace with the breath-taking developments that the telecom sector is witnessing. Instructions for Implementing Carrier Selection and Carrier Pre-

Selection in Jordan By implementing the instructions on Carrier selection, fixed or mobile telecom service users will be able to select alternative service providers – other than the service provider subscribed with – by means of entering a special set of symbols and digits before making the call. In the case of Carrier Pre-Selection, the users of fixed or mobile telecom services will have the chance to benefit from such a service, whereby, with the service provider already pre-selected, the users can make phone calls as per agreements concluded with the operators without the need to first enter a special set of symbols and digits every time a phone call is made. These services are expected to come into operation in the first half of 2006. Preparation for Implementing the Quality of Services Regulatory

Framework Preparations to start implementing the instructions of the Quality of Service framework which will begin in early 2007 after the approval of these instructions by the TRC Board of Commissioners, which is expected in early 2006. These preparations include: setting procedures for auditing quality of service reports received from Telecom Service providers on a semi-annual basis, and procedures for

32

publishing the quality information to the public to benefit them through knowing the quality of service provided by the telecom service providers. Transitioning of individual licensees to the new licensing regime

Completion of the process to transition all licensees to the new licensing regime. The processes started in 2005 with the transitioning of class licensees to the new form of class license. Work will be continued to transfer non-class licensees to the new licensing regime which is expected to be completed before the end of 2006. Issuance of specialized regulatory instructions

It is expected that a number of regulatory instructions will be issued in 2006 to enhance competition and foster a flexible working environment characterized by transparency and fairness.

Regulation of frequency spectrum Action will be taken to establish a National Spectrum Allocation Table, in addition to the completion of the process of setting and registering the Digital Broadcasting Plan for terrestrial television and radio with the International Telecommunication Union (ITU). Moreover, measures will be taken to protect working and future stations operating in the mobile radio telecom sector in Jordan vis-à-vis digital terrestrial television and radio broadcasting stations though registering and incorporating them in the reference of the digital plan with the ITU. Internal procedures

The approved audit plan for 2006 will be executed, and the internal audit plan for 2007 will be prepared in accordance with the Risk-based Model, with the aim of upgrading work procedures. Work on effective and transparent documentation of the work procedures in all TRC departments will be continued. Training plans will be drawn to develop staff capabilities and increase effectiveness and raise performance levels, with special focus on skill and know-how. The privileges and benefits offered to staff will be reconsidered with an eye on improving them to enhance work motivation and to prevent the brain-drain and attract high-level professionals. The internal rules and regulations will also be modified so as to develop human resources and raise the level of productivity.

33

AMMAN - THE HASHEMITE KINGDOM OF JORDAN

EXHIBIT-A

Balance sheet as of December 31, 2005

2004

ASSETS 2005 (Adjusted)

Current Assets JD JD

Cash and cash equivalents 6,261,211 6,130,494

Accrued revenues 34,110,849 29,113,669

Accounts receivable 3,560,014 5,155,140

Other debit balances 40,324 26,591

Warehouses 37,414 43,381

Total Current Assets 44,009,812 40,469,275

Non - Current Assets

Property and equipment 799,984 736,256

Payment on projects under construction - 32,400

Total Non-Current Assets 799,984 768,656

TOTAL ASSETS 44,809,796 41,237,931

34

TELECOMMUNICATIONS REGULATORY COMMISSION

A COMMISSION WITH FINANCIAL AND

ADMINISTRATIVE INDEPENDENCE

AMMAN - THE HASHEMITE KINGDOM OF JORDAN

EXHIBIT-A

Balance sheet as of December 31, 2005

2004

LIABILITIES AND RETAINED SURPLUS 2005 (Adjusted)

Current Liabilities JD JD

Unearned revenues 2,862,961 3,303,236

Unrealized licenses and frequency revenues 263,781 1,838,359

Accounts payable 1,505,226 1,897,661

Deposits 2,797,393 813,034 Provision to purchase property and equipment 126,639 2,134,222

Total Current Liabilities 7,556,000 9,986,512

Retained surplus - Exhibit C 37,253,796 31,251,419

TOTAL LIABILITIES AND RETAINED SURPLUS 44,809,796 41,237,931

35

TELECOMMUNICATIONS REGULATORY COMMISSION A COMMISSION WITH FINANCIAL AND

ADMINISTRATIVE INDEPENDENCE

AMMAN - THE HASHEMITE KINGDOM OF JORDAN

EXHIBIT-B

Statement of income for the year ended December 31, 2005 2004

2005 (Adjusted)

Revenues JD JD

Revenues 53,516,234 53,192,379

Other revenues 344,555 324,795

Amir grant revenues 1,392,805 1,784,585

European Union grant revenues 303,601 -

Total Revenues 55,557,195 55,301,759

Expenditures

Operating expenses (2,056,367) (1,937,087)

Conversion expenses (300,027) (268,171)

Technical consulting and study expenses (1,404,373) (1,530,935)

Amir grant expenses (1,392,805) (1,784,585)

European Union grant expenses (303,601) -

Total Expenditures (5,457,173) (5,520,778)

Surplus for the year - Exhibit C 50,100,022 49,780,981

36

TELECOMMUNICATIONS REGULATORY COMMISSION A COMMISSION WITH FINANCIAL AND

ADMINISTRATIVE INDEPENDENCE

AMMAN - THE HASHEMITE KINGDOM OF JORDAN

EXHIBIT-C

Statement of changes on surplus for the year ended December 31, 2005 2004

2005 (Adjusted)

JD JD Retained surplus at beginning of the year-Before adjustement 31,251,419 21,513,614

Prior years adjustments- Note 13 - (317,089) Retained surplus at beginning of the year- After adjustement 31,251,419 21,196,525

Surplus of the year - Exhibit B 50,100,022 49,780,981

Transferred to the Ministry of Finance (44,100,000) (38,500,000)

Transferred to deposits in lieu of additional benefits to Jordan (2,000,000) -

Transferred (from) to provision to purchase property and equipment

2,002,355 (1,226,087)

Retained surplus at end of the year - Exhibit A 37,253,796 31,251,419

37

TELECOMMUNICATIONS REGULATORY COMMISSION A COMMISSION WITH FINANCIAL AND

ADMINISTRATIVE INDEPENDENCE

AMMAN - THE HASHEMITE KINGDOM OF JORDAN EXHIBIT-D

Statement of cash flows for the year ended december 31,2005

2004

2005 (Adjusted) CASH FLOWS FROM OPERATING ACTIVITIES JD JD Surplus for the year 50,100,022 49,780,981 Adjustments for:

Depreciation 127,340 126,287

Prior years adjustments - (317,089)

Provision to purchases property and equipment (5,228) (842,646)

Changes in operating assets and liabilities:

Accrued revenues (4,997,180) (5,121,148)

Accounts receivable 1,595,126 (1,375,086)

Other debit balances (13,733) (13,014)

Warehouses 5,967 (12,159)

Unearned revenues (440,275) (1,835,868)

Unrealized license and frequency revenues (1,574,578) 299,254

Accounts payable (392,435) 1,740,742

Deposits (15,641) (379,610)

Net cash provided from operating activities 44,389,385 42,050,644

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment (203,327) (224,933)

Disposal of property and equipment 12,259 84,847

Payments on projects under constuction 32,400 (32,400)

Net cash used in investing activities (158,668) (172,486)CASH FLOWS FROM FINANCING ACTIVITIES Transferred to the Ministry of Finance (44,100,000) (38,500,000)

Net cash used in financing activities (44,100,000) (38,500,000)

Net increase in cash and cash equivalents 130,717 3,378,158

Cash and cash equivalents- beginning of the year 6,130,494 2,752,336

Cash and cash equivalents- end of the year - Exhibit A 6,261,211 6,130,494

38

Appendix 1

The ICT Sector in Jordan Facts & Figures

Preamble The telecommunication sector is considered to be at the heart of the domestic and worldwide economies. As a major contributor to sustainable development it enjoys strategic importance indirectly contributing to the development and prosperity of other economic sectors such as health and education. Consequently telecommunications is a significant contributor to trade and economic recovery. In view of the rapid evolution of telecommunications, governments realized the importance of opening the way for the private sector to invest in it. Numerous countries restructured their telecommunications markets to liberalize the sector thereby enabling private sector investment and the diversification of products and services, which the government had previously managed. Government’s either partial or complete withdrawal from participation in the sector has allowed room for private investment which has in turn fuelled innovation in service, reduction in prices and incareses in quality of service, as well as provider consumer choice. His Majesty King Abdullah II’s vision has helped to shape the development of telecommunication and information technology sector in Jordan, which he expressed in the following words: “we realize that private investment is the real engine for sustainable economic development. We have, therefore, adopted a course of action to encourage such investments in key sectors of Jordan’s economy. This course includes legislation aimed at liberalizing these sectors through privatization, proper regulation, and the guarantee of fair competition.” The government also realized from the beginning the importance of keeping apace with international development in this field; and the investment in infrastructure, In so doing it recognised that investments in the infrastructure and telecom services would not come unless the path was opened for the private sector to invest in telecommunications and that the most effective means to attract investors to the sector and encourage them to provide innovative services that would benefit users and the national economy was to reform the regulatory environment. The government made great strides in this direction. It drew-up a program to restructure the sector, which resulted in the separation between the roles of the regulator, policy maker, and service provider. A new telecom law was promulgated in 1995, which established the TRC as a financially and administratively independent organization, to regulate the industry and implement government policy in this field.

39

Later, the Telecommunications Corporation was transformed into a public shareholding company in 1997, while the Ministry of Telecommunications and Information Technology was entrusted with the task of proposing policies. In early 2000 the government partially privatised Jordan Telecom by selling 40% of its share to a consortium led by France Telecom and the Arab Bank. The Social Security Corporation bought a further 8% of government shares and 10.5 percent was sold to the public, bringing the government’s share down to 41.5%.

In 1999 Jordan joined 135 nations in the WTO, to become a full member in 2000. Jordan fulfilled its commitments related to the telecom sector, which included the full liberalization of the sector by 2004.

In keeping with this, Jordan promulgated an amendment to the Telecommunications Law in 2002, which reaffirmed the independence of the TRC by reforming its board of commissioners from a part-time board headed by the Minister of Telecommunications to a board of commissioners comprising five people of experience who are engaged full time in the work of the TRC.

The government also issued the Statement of Government Policy on the Information & Communications Technology Sectors & Postal Sector in 2003, in which it affirmed its commitment to fulfil all Jordan’s telecoms commitments to the WTO and specifically to end Jordan Telecom’s exclusivity by the end of 2004, and opening the telecom market completely for competition.

The Telecom sector in Jordan has witnessed notable developments in the past few years, with substantive influx of investments and the introduction of a number of measures by the government to ensure proper regulation and functioning of this most vital of sectors. In the following sections indicators will be shown to reflect these developments.

• Fixed phone service subscribers: 52.1%* • Mobile phone subscribers: 59.7%* • Internet subscribers: 31.7%*

*Until end of 2005. The number of licensed telecom service providers increased to 40 in 2005, up from 23 in 1999. The volume of investments in the telecom sector in Jordan increased from JDs 111.4 millions in 2004 to reach JDs 155 millions in 2005. Total revenues in 2005 reached approximately JDs 864 millions.

In spite of the cutbacks in staff numbers working for Jordan Telecommunication Company from 3,048 employees in the year 2004 to 2,701 in the year 2005 - an annual reduction of 8.2% - the total number of staff working for licensed companies reached 5,325 in the year 2005, compared to 5,094 employees in 2004.

40

No. of subscribers to telecom services (2000-2005) (in thousands)

Type of service 2000 2001 2002 2003 2004 2005Fixed telecommunications 620 660 674 623 638 628 Mobile phone & radio telecommunications 389 866 1,200 1,325 1,624 3,138 Internet 32 66 62 92 111 197 Radio paging 12 4.4 4.6 2.3 2.1 2.2

Penetration Rate of licensed telecom services (2000-2005)

Type of service 2000 2001 2002 2003 2004 2005Fixed telecommunications 13% 13.4% 13.3% 12% 11.9% 11.6% Mobile phone & radio telecommunications

8.1% 17.5% 24.1% 25.5% 30.3% 57%

Internet 0.66% 1.33% 1.23% 1.84% 2.07% 3.6% Radio paging 0.24% 0.089% 0.091% 0.044% 0.04% 0.04%

Volume of investment in the telecom sector (2000-2005) (in millions)

Type of service 2000 2001 2002 2003 2004 2005Fixed telecommunications 55.7 90.1 38.2 11.4 10 12.3 Mobile phone & radio telecommunications

92.9 89.2 93.3 91.9 100.3 137

Internet 4.3 5.5 3.5 1.5 0.7 5.6 Prepaid cards - - 2.6 1.1 0.4 0.4 Radio paging 0.02 0.1 0.004 - - - Total 152.92 184.9 138.2 105.9 111.4 155.3

No. of employees in the telecom sector

Type of service 2000 2001 2002 2003 2004 2005Fixed telecommunications 4,907 4,792 4,548 3,663 3,048 2,701 Mobile phone & radio telecommunications 879 1,044 1,168 1,249 1,641 2,124 Internet 370 457 408 294 353 450 Prepaid cards - - 36 35 44 42 Radio paging 44 25 17 10 8 8 Total 6,200 6,318 6,177 5,251 5,094 5,325

41

Number of Subscribers and Penetration Rate of Land Lines (2000-2005)

عدد المشترآين ونسبة انتشار الهاتف الثابت (2005-2000)

590

600

610

620

630

640

650

660

670

680

2000 2001 2002 2003 2004 2005

فأللبا

10%

11%

11%

12%

12%

13%

13%

14%

14%

عدد المشترآين نسبة اإلنتشار

Number of Subscribers and Penetration Rate of Mobile & Trunking (2000-2005)

ل رادیو المتنق عدد المشترآي ونسبة إنتشار الهاتف المتنقل وال(2005-2000)

0

500

1000

1500

2000

2500

3000

3500

2000 2001 2002 2003 2004 2005

فاأللب

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

عدد المشترآين نسبة اإلنتشار

42

Number of Subscribers of internet and Penetration Rate (2000-2005)

عدد مشترآي اإلنترنت ونسبة اإلنتشار (2005-2000)

0

50

100

150

200

250

2000 2001 2002 2003 2004 2005

فأللبا

0%

1%

1%

2%

2%

3%

3%

4%

4%

عدد المشترآين نسبة اإلنتشار

Number of Subscribers and Penetration Rate of Paging (2000-2005)

عدد المشترآين ونسبة اإلنتشار لخدمة النداء اآللي (2005-2000)

0

2

4

6

8

10

12

14

2000 2001 2002 2003 2004 2005

فاأللب

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

عدد المشترآين نسبة اإلنتشار

43

Appendix: 2

Licensed Telecom Companies

Licenses issued until end of 2005

*Individual licenses

N.B.: These companies have not transitioned to the new form of individual licenses in accordance with the new regime as of the end of 2005, except for Batelco-Jordan, which was granted a license in accordance with the new form on Licenses. * Class licenses

# Name of company Website 1 Jordan Radio Paging (Mirsal) www.mirsal.com 2 Batelco - Jordan www.batelco.jo 3 International Data Exchange (Cyberia) www.cyberia.jo 4 Computer Networking Services (CNS) www.cns.com.jo 5 Middle East Communications Corporation www.mec.com.jo 6 Jordan Telecommunications Company (JTC) www.jordantelecom.jo 7 Jordan Data Communications (Wanadoo) www.wanadoo.jo 8 Viacloud - Jordan www.viacloud.com 9 Emirates for Information Technology (Info2Cell) www.info2cell.com 10 Information and communication Expertise (ICE) 11 Integrated Information and Telecommunications

Services (SITA - Jordan) www.sita.int

Name of company Type of service WebsiteJordan Telecommunication Company (JTC) Fixed telecommunications www.jordantelecom.jo

Jordan Mobile Telephone Services Company (Fastlink)

Mobile telecommunications www.fastlink.com.jo

Petra Mobile Telecommunications Company (MobileCom)

Mobile telecommunications www.mobilecom.jo

Umniah Mobile Company Mobile telecommunications www.umniah.com New Generation Telecommunication

Company (XPress) Trunked Radio Dispatch www.xpress.jo

Batelco – Jordan www.batelco.jo

44

12 Jordan Mobile Telephone Services Company (Fastlink)

www.fastlink.com.jo

13 Network Exchange Technology (NEXT) www.next.jo 14 Intercontinental Media and Communications

Services

15 Al-Deka for Telecommunications Services www.al-deka.com 16 Alia Royal Jordanian Airlines www.rja.com.jo 17 Jordan Data Communcations Services

(LINKdotNET) www.link.jo

18 Arab International Company for Education & Investment / Applied Science University

www.asu.edu.jo

19 Swiftel International Jordan Company www.swiftel.com 20 Petra Mobile Telecommunications Company

(MobileCom) www.mobilecom.jo

21 Al-Ahliya Telecommunications Services www.net7aka.com 22 New Generation Telecommunication Company

(XPress) www.xpress.jo

23 Egyptian-Jordanian Corporation for Data Transfer (TE DATA - Jordan)

www.tedata.net

24 Pella Telecommunications Company www.fastlink.com.jo 25 LaSilkee Virtual Connection Company www.lasilkee.com 26 Sirat Telecom Technology 28 Crystal Telecommunications Company 29 Nidaa' Amman Telecommunications Services

(Amman Call) www.ammancall.com

30 Reuters 32 Jordan Bell Telecom 33 The Jordanian Vision for Telecom 34 Ali AL-Hussaini and Partner Company 35 Izzydeen Abu Salah & Partner

• Individual License: Obtaining an individual license is required by all public telecom network operators or by operators providing public telecom services using scarce resources, which defined as radio frequency spectrum, public rights of way and telephone numbers. The fees for an individual license are 100,000 JDs.

• Class License: Obtaining a class license is required by all public telecom

service providers that do not use scarce resources or those providers whose use of such scarce resources is deemed by the TRC not to have a tangible effect on these resources. The fees for this type of license are 30,000 JDs.

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The Hashemite Kingdom of Jordan

Telecommunications Regulatory Commission (TRC)

A PROGRAM OF LICENSING IN COMPLIANCE WITH GOVERNMENT POLICY IN THE ICT SECTORS & POSTAL SECTOR

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PROGRAM OF LICENSING

1. THE AIMS OF THE LICENSING PROGRAM

A program of licensing of entrants to the Fixed Telecommunications sub-sector is necessary as rights, granted under the license of Jordan Telecom (JT), to exclusivity of supply of services by JT end at 31st December, 2004 and it is accordingly essential to enable the entry of competitors to JT at 1st January, 2005.

In order that the program of licensing to Fixed Telecommunications is set within a proper context, this document further informs of the evolution to an Integrated Regime of licensing and regulation that is common to all activities within telecommunications. The Integrated regime will be fully operational in 2006, in accordance with the Telecommunications Law and related existing license agreements.

1.1 2005 Licensing Program

The 2005 Program of licensing will allow entry to the fixed services market in competition with JT. The overall aim is to achieve the specific goals of Government Policy, in particular to

a) The enhancement from present levels of the scope, availability and quality of services, and, choice of service providers, made available in Jordan. It is necessary that fixed services available in Jordan at least match those of peer states. They are necessary to the development and growth of the economy and the meeting of government’s social goals.

b) Particular goals, within the progressive development of the sub-sector, include but are not limited to; the introduction of alternative international services, alternative international capacity and gateways, the exploitation of new technologies, notably in the data communication area, and, the exploitation of technologies and systems that may be used for the provision of multiple services.

c) It is a goal, that, overall, the fixed telecommunications sub-sector supplies facilities and capacity upon which other sectors within ICT may add value in an innovative manner. These elements to be affordable to the user and profitable to the supplier.”

1.1.1 Motivations

In formulating its Program, therefore, TRC has been motivated by a desire to open immediate opportunities for the private sector to innovate and invest, and, to bring existing National assets |(networks owned by some governmental organizations) into play within the telecommunications market, in a proper and fair manner.

1.1.2 Anticipated Outcome Of The Program

TRC anticipates that its Program, together with necessary regulatory measures related to interconnect and access services and the enablement of service supplier selection by users, will result in the entry to the market of a limited number of providers of international capacity and services, voice over internet protocol (VoIP) and other data service providers, enhanced provision of broadband services, the expansion of the scope of the businesses of existing licensees, including those of JT and the licensees providing public mobile wireless services, and, the greater utilisation of existing assets. TRC does not anticipate that its Program will result in any major replication of the JT fixed network, which will remain the dominant infrastructure in the fixed service market.

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1.1.3 Removing Some Constraints From JT

The Program specifically recognises that in subjecting JT to competition it is necessary to progressively remove or alter the regulation of JT activities. There must continue to be safeguards against the abuse of market power because most market entrants must use JT services in some form. However, as true competition arises JT can be freed of certain constraints. The ending of monopoly, whilst a challenge for JT, for which it has had several years to prepare, also represents an opportunity for it to enter a new phase of innovative development.

1.1.4 Benefits

Substantial benefit will arise from the liberalisation of the fixed sub-sector. The benefits will be seen not only in lower user pricing within expanding levels of demand, but also in a wider stimulus to the National economy. It can be expected, for example, that IT enabled services that have a dependence upon the availability of plentiful and reasonably priced fixed telecommunications capacity, will be established

1.2 Evolution To The Integrated Regime

The evolution to the Integrated Regime of licensing and regulation to be fully implemented in 2006, will further improve the efficiency of all markets within telecommunications.

a) The present regime is based on the assumption that the fixed voice business of JT will be the

dominant force in the market. JT fixed voice services remain an important element of the overall market, but increasingly mobile and data services are taking the leading role. It is also a fact that present and future technology developments mean that it is practically difficult, as well as being unfair to some licensees, to continue to maintain the old distinctions between fixed and mobile services and between voice and data.

b) TRC will implement an Integrated Regime that recognises these realities and removes

outdated distinctions and prohibitions associated with narrow service and technology definitions in favour of a common approach to licensing of all services activities. This will permit TRC to adopt a less interventionist and confrontational role in regulation of the market by placing less emphasis on the enforcement of license terms and more on the assurance of true competition.

c) It is clearly necessary to anticipate this Integrated Regime, which will not be fully effective

until 2006, when licensing in 2005.

2. WHAT IS WITHIN THE 2005 LICENSING PROGRAM

2.1 The Law sets the requirement

Article 20 of the Telecommunications Law states:

“The establishment, operation, and administration of public telecommunications networks, as well as the provision of public telecommunications services, is not permitted unless a license has been obtained pursuant to the provisions of this Law.”

2.1.1 Individual and Class Licenses

Accordingly, as of January 1, 2005, all new service providers and existing class licensees will be issued with licenses in the form that will allow for the evolution to the full Integrated regime that is described subsequently.

a) All providers of public telecommunications services and underlying networks that use scarce

resources will require Individual licenses. Scarce resources are defined as radio spectrum,

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public rights of way and telephone numbers. The initial fee upon award of an Individual license will be JD 100,000

b) All providers of public telecommunications services that do not use scarce resources, or those

whose use of scarce resources is determined by TRC not to be material, will require Class licenses. The initial fee will be JD 30,000

The application requirements and associated criteria for the award of an Individual License are more stringent than those applied to Class licenses.

TRC reserves the right to modify license fees when such a modification can be objectively justified by extenuating circumstances or process of licensing and are published in advance of application for licenses.

All licensees will pay an annual license fee, representing a percentage of revenues arising from licensed activities, which recovers the costs of TRC in regulating the market.

2.1.2 Exclusions Related To Scarce Resources

It has been stated earlier that the test to be applied to determine whether an Individual rather than a Class license must be sought is whether the licensee intends to further apply for, or secure, the use of scarce resources. It has also been stated that TRC will have some level of discretion in applying this test, where it can specifically determine that the use of scarce resources will not materially deplete the resource so as to create a competitive barrier. If TRC makes such a determination the applicant may operate under a Class license.

For greater certainty, TRC states some specific instances where it presently intends to apply this discretion with regard to scarce resources:

1. Providers of public VSAT based services, to the extent that the only scarce resource used is

radio spectrum directly related to VSAT operation and in operating satellite systems in the ITU configuration

2. Radio spectrum used on a secondary or non-interference basis, eg. Internationally unlicensed

spectrum typically used for WiFi.

3. Use of dialing codes for routing to enable carrier pre-selection functions.

4. International Signaling Point Codes (ISPC).

2.2 Treatment of JT and Licensees Providing Public Mobile Wireless Services

Jordan Telecom and the current public mobile wireless licensees will not be issued with new licenses to be effective 1st January, 2005 but will instead have of the order of an additional year to move to the new Integrated licensing and regulatory regime (target January 1, 2006), subject to the related provisions of the telecommunications law and existing license agreements, and the completion of necessary procedures (if any) set out therein, as well as other procedures that the TRC develops to ensure equivalent and fair treatment of these licensees with respect to each other and to new applicants for individual licenses. Those licensees may, of course, voluntarily transition to the Integrated licensing within 2005, should they so wish.

2.3 No Constraints on Services Provided or The Means of Provision

Within the context of application procedures and initial fees, there will be no limitation on the number of Licenses that will be issued, or upon the type and range of non public mobile wireless services that may be provided, or on the types of associated networks used, except as required by considerations relating to normal network safeguards, security, use of scarce resources, and technical limitations. The TRC will lend its support to the introduction of new technologies within its type approval mechanisms and by expediting consideration of proposals

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Licensees will be required, when applying for licenses, to advise both the details of technology to be used and the services to be provided, and subsequently to advise TRC of any changes to services or technologies. Beyond these requirements, licenses will not be granted for specific services or technologies but for all and any activities, except the provision of services that represent the licensed activities of the public mobile wireless services licensees.

The TRC does not intend, in general, to impose geographic service coverage obligations or limitations upon new licensees. It prefers that market forces should determine the extent of coverage. However, situations may exceptionally arise where a coverage obligation may be an appropriate measure to be applied in the interests of fair competition or for other compelling reasons, including compliance with Government Policy. Should such circumstances arise the TRC will consult publicly, before imposing such an obligation by means of a schedule appended to licenses or through specific Regulation.

2.4 Equal Opportunities for Existing and New Licensees

It is important not to disadvantage existing licensees that are not required to transition their licenses until 2006. Accordingly, from January 1, 2005, if JT or the four existing holders of licenses that relate to the provision of various forms of public mobile wireless services (public mobile wireless licensees) wishes to provide services, other than services already permitted under their existing licenses, they may apply for a license under the 2005 licensing arrangements that have been described. Such a license would only be granted to a subsidiary or affiliate entity of the licensee. The grant of a new license would, for example, permit the independent provision of international services by subsidiaries or affiliates of the public mobile wireless services licensees, in a manner that ends the monopoly of JT in that area and thus offers potential advantage to public mobile wireless services licensees.

It is also equally important that market entrants and those existing licensees that transition licenses before 2006 be assured that in due course parity of licensing will be achieved. Accordingly, licenses issued to a subsidiary or affiliate of JT or a public mobile wireless services licensee, under the 2005 Program, will incorporate amongst attached schedules an acknowledgement that in accepting the grant of a license to a subsidiary or affiliate it will transition its existing licenses to the Integrated Licensing and Regulatory regime, upon its introduction (target January 1, 2006).

2.5 An evolving Environment

As indicated earlier in this document the elements of the liberalization process, and in particular the progression toward an Integrated Licensing and Regulatory Regime, are evolutionary in nature. The approach to licensing that has been adopted means that licensees will be progressively governed by the terms of generally applicable Regulations as these are developed, rather than by detailed terms within or appended to licenses. By 2006, the full ‘body of regulation’ will be in place within the Integrated Regime.

In acknowledgement that there can be concern that the imposition of Regulations may provide opportunities for TRC to act in an arbitrary manner, TRC undertakes that, except in circumstances of self-evident emergency, proposals for Regulations will be submitted for public consultation and the results of that consultation will be published before any subsequent Regulation is put in place.

In any evolutionary environment, and particularly in one in which certain licenses may not be transitioned until 2006, issues of disparity of licensing and regulation between licensees might arise within 2005. TRC acknowledges its obligations to existing licensees with regard to parity and will so order its licensing and Regulation introduction program so as to maintain substantive parity of treatment. Clearly, disparity of treatment will continue to remain appropriate where it is associated with safeguards, such as safeguards against the abuse of market power or other market dominance related matters.

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3. ACTIVITIES FALLING OUTSIDE THE 2005 LICENSING REQUIREMENTS

In determining an approach to licensing for 2005, it is also necessary to determine the activities that can take place without the need for licensing.

3.1 International Capacity and Connection Points

An important factor in the development of the telecommunications sector in Jordan, and also the market for IT and telecommunications based services, is the availability of international transmission capacity. This capacity, the most important of which has been the FLAG submarine cable that provides optical fiber based transmission facilities, has been under the control of JT and accordingly the issue of separate licensing and regulation has until now not arisen.

The TRC has established that submarine cable operators do not need licenses for the provision of cable to Jordan to the point where it connects to another public telecommunications network within Jordan. The provision of service from the connection point inward to Jordan is a licensable activity. These stipulations will also apply to similar systems of satellite telecommunications.

In relation to points of connection for international capacity it is the intention of TRC to regulate to ensure that these points become open to use by providers other than JT.

Present regulation upon JT, to the extent that the need for it arises because of its control of those points, will be eased as competition develops at those points of connection or in the provision of new capacity.

3.2 Assets That May Be Utilized

Jordan has sources of basic telecommunications transmission media that are presently not utilized for the provision of public telecommunications services. This exclusion is not economically efficient. However, it is necessary to determine at what point the making available of such assets and other rights for the ultimate provision of public services become licensable activities. TRC has determined that the following should apply:

a) If the activities of owners of assets are restricted to the transfer, by means of a transaction

with an unconnected third party, of an ownership interest in the asset or elements divided from the greater whole of the asset, no telecommunications license is required. Such assets could include, for example, unlit strands of fibre optic cable or so called ‘dark fibre’ This position applies notwithstanding that the party to whom the ownership interest is conveyed exploits the asset for the provision of telecommunications services and must accordingly be licensed.

b) The simple grant of rights of way to third parties over, for example, poles, pylons, railways or

land does not place the grantor in the position of providing a telecommunications service, notwithstanding the fact that the grantee may exploit the rights of way for the provision of telecommunications services and thus must be licensed.

3.3 Premium Rate Services

The provision of premium rate services will continue to be an activity that is not subject to license.

4 THE INTEGRATED REGIME TO BE FULLY IMPLEMENTED WITHIN 2006

The description of the 2005 licensing Program has made it clear that it will be consistent, in form, with the Integrated Licensing and Regulatory regime to be implemented having complied with

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relevant provisions of the Telecommunications Law and existing licenses.

Licensing under the true Integrated Regime will share the attributes of the 2005 Program in that it will not discriminate between types of service, sectors, technologies or infrastructures. The Regime will, therefore, by 2006, encompass JT and the licensees that hold licenses to provide various public mobile wireless services.

Under the Integrated Regime the provision of service will continue to be protected by Universal Service Obligations placed upon designated Universal Service Providers, the terms of which will accord with Government Policy. The obligation may in due time be associated with the establishment of a Universal Service Fund.

4.1 Enables a Change of Approach to Market Regulation – Competition Assurance

Once all licensees are brought within a common regime it will be possible for TRC to assure fair competition within the market through regulations that take an overall view of the supply of services rather than, as now, through enforcement of narrow license terms.

This regime will, within the limits of availability of scarce resources and normal safeguards free existing licensees to expand the scope of their business and allow all market entrants to innovate and compete on equal terms.

The details of regulation that will be required and the program for its development is set out in Section 5.

TRC considers the evolution to an Integrated Licensing and Regulatory regime to be a pivotal act for the optimal development of the telecommunications sector.

4.2 Government Revenues

It must clearly be the aim of an Integrated Regime that all licenses should have common terms. At the present time JT and the licensees that provide forms of public mobile wireless service, have, as a license term, the obligation to share revenue with Government.

The obligation upon JT ends at 31st December, 2004.

Revenue share will remain an obligation for the licensees that provide public mobile wireless services. .

Under an Integrated Regime, revenue share that remains applicable and other arrangements will be preserved through specific Regulation.

Accordingly, Government revenue that remains applicable following the ending of the JT monopoly will be unaffected by the change of Regime and should not represent a factor in deliberation of the licensing Program.

5. ACTION PLAN

TRC has carefully considered its resources and drawn up detailed plans to enable it to meet the objectives. It will be necessary to supplement TRC resources for a period, in which time it will also build its capability. To these ends, donors have indicated their continued support for certain tasks and TRC has issued a tender for the supply of experienced consulting support for other defined tasks.

The necessary actions are illustrated within the diagram attached as Appendix 2.

When the Council of Ministers approves the Program of Licensing, TRC will take the following actions:

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1. It will communicate with existing licensees, potential investors and market entrants and the

public by publishing an information memorandum. This document will set out in detail the license application procedures and information requirements, criteria for approval or rejection of applications, and, provide the form of license. The document will also place the licensing scheme within the context of the earlier consultation paper published by TRC and the responses received to that paper.

2. Following publication, TRC will accept license applications. The TRC will grant licenses

,where appropriate, in order that market entrants may, if they wish, be operational at 1st January, 2005

3. TRC will continue the licensing process indefinitely. Applicants may accordingly apply for

and receive licenses at any time according to due processes.

4. Early in 2005, TRC will initiate the formal processes, consultations and discussions necessary for the transition of the existing licenses of JT and the public mobile wireless licensees, and where necessary any remaining class licensees, to the Integrated Regime that will apply in 2006. It is open to any of the licensees to voluntarily transition licenses within 2005.

5. TRC will appoint consultants, in addition to those presently made available to the TRC, with

the aim that these consultants both,

a) Assist TRC to develop the regulations that are necessary to the functioning of a fully competitive market and which further permit the introduction of an Integrated regime, and,

b) Assist TRC to enhance its knowledge and capabilities to a standard that is adequate to the

operation of an Integrated Regime.

6. The introduction of Regulations that are listed, by time, within the diagram, are the subject of a highly detailed project plan, for which resources are, or will shortly be, in place. The sequence in which Regulations are put in place is particularly important. Regulations will only be introduced following open public consultation and within the bounds of the powers of the TRC under the Telecommunications Law.

7. In 2006 having complied with relevant provisions of the Telecommunications Law and

existing licenses, all licenses will be brought within the Integrated Licensing and Regulatory regime that has been described in Section 4 of this document.

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Appendix 1 – Relevant paragraphs drawn from the Statement of Government Policy on the Information and Communications Technology and Postal Sectors – published in September, 2003

37 “Government reaffirms that the monopoly status that is presently

enjoyed by Jordan Telecom (JT) in certain key areas of telecommunications activity will cease at 31st December, 2004.

38 Government requires that the fixed sub-sector should be fully opened

to competition in supply of services, at, or, as soon as is practically possible after 1st January, 2005.

39 Government requires that explicit proposals for further licensing

within the sub-sector, and the associated license terms, application criteria and processes, be prepared by and published for consultation with public and private sector stakeholders. Publication to be as soon as is practicable but no later than 30th June, 2004. The final form of the proposed licensing programme shall be submitted to the Council of Ministers for deliberation. The appropriate decision will be taken within a period of two weeks from the date of its submission. The aim of this schedule is that applications for licenses may be made from September, 2004 onward.

40 Government requires that, within the limits of normal safeguards,

security and technical limitation considerations, no restriction should be placed on the range or type of fixed services that should be licensed. However, Government further and specifically, requires that no viable technology be excluded from use in the provision of licensed services. In addition, where there is no objective case for licensing or regulation of any services that are introduced, Government will support the prerogative of the TRC, under the Law, to forbear from such action.

41 Government requires that competition to JT be from the private sector.

In accord with WTO and other international commitments no unjustified impediments that relate to nationality of ownership, flows of capital and similar matters should be imposed upon potential entrants to the market.

42 Government requires that JT should respond transparently and

constructively to the prospect and reality of competition.

43 Government requires that JT should be subjected to pro-active

regulatory measures, and should, in the remaining period of its monopoly, honour all relevant elements of agreements that it has entered into with Government. The immediate focus of regulatory action must be upon the elimination of any identified anomalies or inappropriate pricing practices and excessive profitability in relation to individual services, and, the creation of an environment into which competition may be introduced at the appropriate time. Government further requires that where there is proven and substantive demand for a service falling within its monopoly, that JT be obliged to provide it, on fair and reasonable terms, whilst its monopoly prevails.

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44 Government requires that when the monopoly of JT is ended that it

continues to be subject to appropriate regulatory scrutiny and control, as it is likely to retain, for a period, dominance or significant market power in some areas.

45 Government requires that the regulatory regime that is to apply before

and after the ending of the JT monopoly should be published, for the guidance of all stakeholders and potential entrants to the fixed sub-sector. Publication to be as soon as is practicable, but no later than 31st March, 2004.

46. The specific goals of this policy are:

47 The removal from the fixed sub-sector of the costs of monopoly

inefficiency. This to be achieved, in the short term, through necessary regulatory action, and, subsequently the effects of open competition. Costs of monopoly can include supra–profitability of certain services and the distorting effects of cross-subsidy between services and elements within services. It is necessary that a position be rapidly reached where correct economic signals are sent to the market and thus appropriate alternative infrastructure investment is encouraged.

48 The enhancement from present levels of the scope, availability and

quality of services, and, choice of service providers, made available in Jordan. It is necessary that fixed services available in Jordan at least match those of peer states. They are necessary to the development and growth of the economy and the meeting of government’s social goals.

49 Particular goals, within the progressive development of the sub-sector,

include but are not limited to; the introduction of alternative international services, alternative international capacity and gateways, the exploitation of new technologies, notably in the data communication area, and, the exploitation of technologies and systems that may be used for the provision of multiple services.

50 It is a goal, that, overall, the fixed telecommunications sub-sector

supplies facilities and capacity upon which other sectors within ICT may add value in an innovative manner. These elements to be affordable to the user and profitable to the supplier.”