RWI-PHASE 3 REPORT ON REGULATORY TRENDS © 2023 The World Bank 1818 H Street NW. Washington DC 20433 Telephone: 202-473-1000 | www.worldbank.org Some rights reserved. This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the goverments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunites of the World Bank Group, all of which are specifically reserved. RIGHTS AND PERMISSIONS The material in this work is subject to copyright Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. ATTRIBUTION Please cite the work as follows: World Bank. 2023. RWI Phase 3 Report on Regulatory Trends. @World Bank. Washington, DC , USA All queries on rights and licenses, including subsidiary rights, should be addressed to: World Bank Publications, The World Bank Group. 1818 H Street NW. Washington, DC 20433, USA fax: 202-522-2825 | e-mail: pubnights@worldbank.org. ACKNOWLEDGEMENTS This Report has been prepared by a team of authors directed by a World Bank Group team led by Jerome Bezzina (Senior Digital Development Specialist) and comprising, Lara Srivastava (Consultant), Terence Razza Rau (Consultant), Anshuman Sinha (Consultant), Joseph Ashraf El-Cass- abgui (Consultant) and Suhail Shersad, Consultant (IDD05). The authors of the report are: Olivier Jacquinot (Progressus), Michael Jensen, Martine Georges-Naïm, Bozena Gawel (Progressus), Laurent Cohen (Progressus), and Helani Galpaya (LIRNEasia). The team is grateful to the peer reviews of the report: Maria Vagliasindi (Lead Economist, INFCE); Doyle Gallegos (Program Manager, IDD07); Georg- es Vivien Houngbonon (Economist, CDIDF), Stela Mocan (Manager, ITSTI), Sharada Srinivasan (Digital Development Specialist, IDD01); Georgiana Pop (Senior Economist, ETIMT); Tania Priscilla Begazo Gomez (Senior Economist, IDD09), and Andrea Barone (Senior Economist, IDD05). Additional comments were provided by Christine Qiang, Director, (Digital Development), Casey Torgusson, Program Manager (IDD09), Isabel Neto (IDD04), Practice Manager (IDD05), Vivien Foster, Chief Economist (INFCE), Tim Kelly (Lead Digital Development Specialist, IDD04) and Seth Ayers (Senior Program Officer, IDD03). This report was done with the support of the Digital Development Partnership (DDP), administered by the World Bank Group. DDP offers a platform for digital innovation and development financing, bringing public and private sector partners together to advance digital solutions and drive digital transformation in developing countries RWI-PHASE 3 REPORT ON REGULATORY TRENDS A 30 Contents CONTENTS 1 EXECUTIVE SUMMARY 1 2 BACKGROUND AND PERSPECTIVE 4 2.1 Background 4 2.2 RWI-Phase 3 in context 4 2.3 RWI-Phase 3 Clusters and Indicators 6 2.4 RWI-Phase 3 Methodology and Assessment Tool 8 2.5 RWI-Phase 3 Outcomes – Attainment Levels 10 3 REGULATORY TRENDS 11 3.1 Despite the existence of modern and sophisticated (de jure) telecommunications regulation in nearly all RWI-Phase 3 countries, there continues to be a lack of (de facto) enforcement in a majority of the countries surveyed. 11 3.2 Telecommunication markets across RWI-Phase 3 countries still present significant regulatory barriers to entry for new operators, primarily with respect to licensing schemes 13 3.3 National Regulatory Authorities (NRAs) have been established in all RWI-Phase 3 countries, but in most cases are not fully independent, and their accountability is limited. 14 3.4 Spectrum management remains sub-optimal due to a lack of transparency both in assignment procedures and mobile spectrum valuation. 15 3.5 Remaining State-linked operators are in some cases altering market competition either through de jure exclusive rights or de facto market positions. 16 3.6 Following an earlier period of blockages and heavy taxation, Over-The-Top (OTT) services are now free to operate in all RWI-Phase 3 countries, but net neutrality remains an important challenge. 18 4 APPENDIX 1: DEFINITIONS 20 5 APPENDIX 2: LIST OF INDICATORS AND SUB-INDICATORS 21 6 APPENDIX 3: LIST OF RWI-Phase 3 COUNTRIES 24 7 APPENDIX 4: ATTAINMENT LEVELS 26 RWI-PHASE 3 REPORT ON REGULATORY TRENDS B 30 Contents List of Tables Table 2-1: List of RWI-Phase 3 Indicators 7 Table 3-1: SLOs with de jure exclusive rights or dominant positions 16 List of Charts Chart 1-1: Attainment levels 2 Chart 2-1: RWI-Phase 3 Strategic positioning 5 Chart 2-2: RWI-Phase 3 Geographic Scope and Indicator Clusters 8 Chart 2-3: Assessment Tool 9 Chart 2-4: Overall Attainment Levels by regions 10 Chart 2-5: Attainment Levels per Region 10 Chart 3-1: Ex ante Competition Regulation 12 Chart 3-2: Regulatory barriers to entry (% countries) 13 Chart 3-3: Percentage of countries reaching Good Practice for mobile spectrum assignment 15 Chart 3-4: Percentage of countries reaching Good Practice for the assignment of recurring spectrum 15 Chart 3-5: OTT operations 19 Chart 7-1: Regulatory Framework and Licensing 28 Chart 7-2: Fair Markets 28 Chart 7-3: International Access 29 Chart 7-4: Spectrum Management 29 Chart 7-5: Regulatory Governance 30 Chart 7-6: Data governance 30 Abbreviations ATI Access to Information ISP Internet Service Provider Body of European Regulators of Electronic Communi- ITU International Telecommunications Union BEREC cations MENA Middle East North Africa COMESA Common Market for Eastern and Southern Africa NRA National Regulatory Authority DPA Data Protection Authority Organization of Economic Cooperation and OECD DPO Data Protection Office Development DTs Digital Technologies OTT Over-The-Top EC Electronic Communications RAO Reference Access Offer ECCAS Economic Community of Central African States RIO Reference Interconnect Offer ECOWAS Economic Community of West African States RoW Right of Ways Gbps Gigabit per second RWI Regulatory Watch Initiative GHG Greenhouse Gas SADC Southern African Development Community ICT Information and Communication Technologies SIIT Surcharges on international incoming traffic Digital ID Digital Identity SLE State-linked Enterprise IMT International Mobile Telecommunications SLO State-linked Operator RWI-PHASE 3 REPORT ON REGULATORY TRENDS 1 1 30 Executive Summary 1 EXECUTIVE SUMMARY The Regulatory Watch Initiative (RWI) is designed as a supplementary tool to aid national administra- tions in contemplating, analyzing and drafting policies, laws and regulations. It can also provide insight on comparative measures to spur Digital Economy growth by informing decision-makers about gaps, trends and best practices for developing a fully enabling environment and to support the adoption of digital infrastructure for integrated and balanced economic and social development. The RWI-Phase 3 is built on the key principles of Objectivity, Indepen- The geographic scope of RWI-Phase 3 covers 66 countries in six dence, Consistency, Scalability, Transparency and Ease of use. The regions: Africa Western and Central (AFW), Africa Eastern and Southern methodology is designed to be practical to implement and is based on (AFE), Middle East & North Africa (MNA), Europe & Central Asia (ECA), 81 Sub-Indicators which comprise 25 Indicators grouped in 6 Clusters. South Asia (SAR) and Latin America & Caribbean (LAC) - making RWI- The scores for each Sub-Indicator are derived from a detailed Question- Phase 3 a more global product with a total of 5,346 data points. naire which is structured to support independent, objective and trans- parent scoring based on the 324 (81 x 4) unique definitions developed to cover the four possible scores (0-3) for each Indicator. 66 Countries in Africa, Middle East, Central & South Asia & Latin America 6 CLUSTERS 25 INDICATORS Regulatory Framework 1 & Licensing 2 Fare Markets 3 International Access 4 Spectrum Management 5 Regulatory Governance 6 Data Governance RWI-PHASE 3 REPORT ON REGULATORY TRENDS 2 30 Executive Summary The scoring of the Indicators has been made by an independent team a structured knowledge database, and accessible via a detailed index of experts, and is based on public information such as laws, regulations which includes more than 2,000 entries. and other publications. All the data used for the scoring is included in es Sourc nted Knowledge Detailed index direct sourcing & e m Database access to country relevant data u oc ic D Publ Measurement of the gap between the Attainment country’s current regulatory & market Level situation & observed good practices Reg Com tory Digital ula pre I e Development 66 Country Snapshots nd nsiv h Snapshots 6 Cluster Snapshots ep e Le 25 Thematic Snapshots end gal & ent A nalysis The final scores for each country are calculated with the RWI-Phase 3 extent to which a country has achieved a Good Practice. Assessment Tool, a custom application which calculates for each Chart 1-1 below presents the average Attainment Level across all indi- country and for each Indicator, an Attainment Level measuring the cators, for each of the 66 countries covered by the RWI-Phase 3. Chart 1-1: Attainment levels RWI-PHASE 3 REPORT ON REGULATORY TRENDS 3 30 Executive Summary Aside from the calculation of Attainment Levels, the Assessment Tool enables the detection of major regulatory issues and bottlenecks in the areas covered by the RWI-Phase 3. Analysis utilizing the Assessment Tool results reveals six major regulatory trends, as described below. 1 Despite the existence of modern and sophisticated (de jure) telecommunications regulation in nearly all RWI- Phase 3 countries, there continues to be a lack of (de facto) enforcement of the regulations in a majority of the countries, particularly across areas such as market regulation and universal service. For instance, in the ex ante regulation of competition, where 65% of the have a detailed legal framework for the content and financing, surveyed countries have detailed legal provisions, less than 10% have but 50% of the countries have not yet realized any project. enforced them. In the area of universal service, 75% of the countries 2 Telecommunications markets across RWI-Phase 3 countries still present significant regulatory barriers to entry for new operators, primarily with respect to licensing schemes. These barriers include, for example, the requirement to have a license in tion or Internet service being applied for. Even for establishing passive 80% of the countries, regardless of the type of public telecommunica- infrastructure, licenses are required in 63% of the countries. 3 National Regulatory Authorities (NRAs) have been established in all RWI-Phase 3 countries, but in most cases are not fully independent, and their accountability is limited. Factors that affect the independence of NRAs range from the nomi- these factors. In addition, full transparency regarding up-to-date market nation and functioning of the board to its financing, and RWI-Phase 3 data, information on board members, annual reports, etc. is observed in shows that none of the surveyed countries reaches full independence in only 5% of the 66 countries surveyed. 4 Spectrum management remains sub-optimal due mainly to a lack of transparency, both in assignment procedures and access to mobile spectrum market participation. The most important issue regarding spectrum is the assignment petitive and open bids or beauty contests, or through market-based method and pricing for mobile wavebands. Only 15% of the RWI-Phase pricing (auctions). 3 countries have assigned mobile spectrum through transparent, com- 5 Remaining State-linked operators are in some cases altering market competition, either through de jure exclusive rights or de facto market positions. There remain 4 countries with de jure monopolistic operators in certain dominant positions in some markets, without strict regulation of market segments, and in 25% of the countries, there are SLOs with their dominance in most of the cases. 6 Following an earlier period of blockages and heavy taxation Over-The-Top (OTT) services are now free to operate in all RWI-Phase 3 countries, but net neutrality remains an important challenge. Until recently, free operation of OTTs was a serious issue in a number of taxes for Over-the-Top (OTT) services. However, to date, for 88% of the countries where blocking measures or significant taxation had adverse countries, there are no or very basic provisions on net neutrality in the effects on the market. The situation has now almost totally changed, regulatory framework. and in 90% of the countries, there are no blocking measures or specific RWI-PHASE 3 REPORT ON REGULATORY TRENDS 4 2 30 Background and perspective 2 BACKGROUND AND PERSPECTIVE 2.1 BACKGROUND Digital technologies provide opportunities to improve quality of life, facilitate business and innovation, and fuel overall economic growth. However, in some developing countries, there are still important policy and regulatory challenges and bottlenecks which constrain the development of a robust digital economy. Despite considerable investment in digital infrastructure, and a relatively intent underlying laws and regulations affecting the digital economy. high penetration of voice communication networks, take-up of Internet This objective can be achieved by providing national governments with services remains relatively low, while geographic and gender-based an analysis of the regulatory features that influence the extent to which digital divides persist across low-income countries and regions. To help a country has an enabling and up-to-date electronic communications address these issues significant changes in policy and regulation are and digital regulatory environment – one that maximizes consumers’ necessary, with a forward-looking approach that strengthens digital and producers’ surplus and encourages private capital mobilization. development, promotes competition and investment in infrastructure Minimizing the barriers to entry while supporting open and competitive and services, protects consumers, addresses environmental impact markets for electronic communication infrastructure and services that and maximizes awareness of the benefits of digital technologies. Doing are affordable, reliable, high-speed and ubiquitous. so requires, among other things, adoption and enforcement of policies, The RWI-Phase 3 aims to cover the key areas of market develop- laws, and regulations that support fair markets for all players, an open ment, such as the regulatory framework and licensing issues, ex ante regime for licensing and authorizations, international access, spectrum regulation of competition, access to international facilities, spectrum management, regulatory governance, and the creation of a privacy and management, regulatory governance and data governance. Pragmatic trust framework for data safeguards and enablers. considerations also drive the selection process of thematics, and the The overall objective of the Regulatory Watch Initiative (RWI) is to help RWI-Phase 3 aims to achieve a balance between comprehensiveness guide countries in improving the enabling environment, including to help and the level of effort in regular data gathering. Additional Indicators identify where more robust enforcement can better match the policy could be considered in future editions of RWI-Phase 3. 2.2 RWI-PHASE 3 IN CONTEXT The RWI-Phase 3 is part of a constellation of national assessment summarizes the strategic positioning of RWI-Phase 3 compared to tools focused on measuring levels of effectiveness of governance other assessment tools, along two axes corresponding on one hand to institutions, policies and regulations, infrastructure and markets. In this the focus of the tool (market vs. regulation) and on the other hand, on respect, the assessments provided by the RWI-Phase 3 should be seen the methodology (independent assessment vs. self-reporting). The size as a subset of the larger governance and regulatory features which can of the bubbles illustrates/indicates the number of countries surveyed in affect telecom operators and the investment climate. Chart 2-1 below each tool. RWI-PHASE 3 REPORT ON REGULATORY TRENDS 5 30 Background and perspective Chart 2-1: RWI-Phase 3 Strategic positioning INDEPENDENT ASSESSMENT MARKET REGULATION SELF REPORTING There are a variety of well-known assessments of the status of telecom measure the quality or performance of the regulatory framework in markets, such as in terms of infrastructural development, levels of each country, instead its goal is to record their existence and features, voice/broadband adoption and affordability, most notably the ITU’s ICT based on responses from the ITU Member State agencies themselves. Development Index and the GSMA’s Mobile Connectivity Index. Market status assessment is not part of the scope of the RWI-Phase 3, but the The OECD’s Product Market Regulation (PMR) Indicators are a well- data generated by these initiatives is used in the analysis below as a known and highly comprehensive set of regulatory indicators for a measure of the effectiveness of regulatory assessments made by the variety of different goods and services. In the E-communications RWI-Phase 3. component, for example, there are up to 16 indicators for Significant Market Power (SMP) alone, which separates the designation into three The RWI-Phase 3 complements other efforts to describe regulatory en- different market areas (wholesale leased lines, call origination and call vironments, in particular the ITU’s Regulatory Tracker1, and the OECD’s termination). Product Market Regulation (PMR) Indicators2. These initiatives focus on a different area to the RWI-Phase 3, being primarily aimed at compre- OECD indicators on the Governance of Sector Regulators are sister hensively itemizing all aspects of the regulatory tools in place, based indicators to the PMR which capture the governance arrangements of on self-reporting by national governments. In contrast the RWI-Phase regulators in the energy, e-communications, rail transport, air transport 3 is based on independent expert assessment of the quality of a small and water sectors. Similar to the ITU Regulatory Tracker, however pre-selected set of regulatory instruments and their level of implemen- scores are only available for 2013 and 2018 and do not include any of tation. Thus for example, the ITU Regulatory Tracker does not aim to the RWI-Phase 3 countries. 1 https://www.itu.int/net4/itu-d/irt http://www.oecd.org/economy/reform/indicators-of-product-market-regulation 2 RWI-PHASE 3 REPORT ON REGULATORY TRENDS 6 30 Background and perspective 2.3 RWI-PHASE 3 CLUSTERS AND INDICATORS In this edition of the RWI-Phase 3, six regulatory areas (“Clusters”), 25 Indicators and 81 Sub-Indicators were selected, as being the main set of regulations which encompass the various aspects of regulation that have the most impact on competition and the development of telecommunications, infrastructure and digital services. The list of Clusters and the rationale for their choice are presented below. Regulatory Framework and Licensing This Cluster corresponds to the main drivers enabling competition and This Cluster also includes the sector-specific taxation, largely ad- innovation, with Good Practices based on finding and analysis from dressed by GSMA5, OECD6, regulatory agencies7, etc. OECD and European commission3 4. Fair Markets This Cluster focuses on the role of telecom regulations in ensuring a Commission and all European National Regulatory Authorities as being level playing field for all operators while fostering convergence and pro- of uttermost importance for the sector8. Related Good Practices have vision of advanced Internet based communication services. The issues also been clearly established by the European Commission9 10. addressed here have been largely stressed in particular by the European International Access International connectivity is among the main bottlenecks for the investment in and provision of affordable fixed and mobile broadband development of digital infrastructure because access to abundant ca- infrastructure11. Good Practices for this Cluster are based on GSMA or pacity at internationally competitive prices is a key element for driving other organizations’ documentation12 13. Spectrum Management Effective management of radio spectrum lies at the heart of the limited. Good Practices for this Cluster have been deeply analyzed by challenge for pervasive, high speed and affordable digital infrastructure, the GSMA14 and other organizations15 16. particularly in emerging markets where fixed infrastructure is more Regulatory Governance The area of regulatory governance is a particularly important Cluster In this respect the Cluster measures the independence, the financing because it affects the ability of the regulator to make independent de- and the accountability of the NRA, as well as the existence and enforce- cisions and limits regulator capture, while also influencing the extent to ment of a universal service fund17. which the regulator can support the development of digital infrastruc- ture in unprofitable areas as part of national universal service objectives supported through a universal service fund. 3 7 See for instance https://www.oecd-ilibrary.org/trade/approaches-to-market-openness-in-the-digital- Instance Nationale des Télécommunications - Rapports d'étude du régime fiscal du secteur des age_818a7498-en, or https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age/digital- télécommunications en Tunisie (intt.tn) 8 markets-act-ensuring-fair-and-open-digital-markets_en See for example https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A52002XC0711(02) 4 9 See http://1e8q3q16vyc81g8l3h3md6q5f5e.wpengine.netdna-cdn.com/wp-content/uploads/2016/07/Nigeria- International good practices for market analysis can be defined through a regional concept. For instance, the Coalition-Session-I-Good-practice-in-the-regulation-of-infrastructure-sharing_2-7-16_DM-4713865_2.pdf European Commission has extensively detailed the methodologies and concepts to be used for determining 5 Taxing mobile connectivity in Asia Pacific 2018, Taxing mobile connectivity in Latin America 2017, Mobile relevant markets for ex ante regulation and assessing significant market position (see for instance https://eur- telephony and taxation impact in Latin America 2012, The Impact of Taxation on the Development of the Mobile lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018XC0507(01)&rid=7 or https://eur-lex.europa.eu/ Broadband Sector 2011, Delivering mobile connectivity in MENA: A review of mobile sector taxation and licence legal-content/EN/TXT/?uri=CELEX:32020H2245). Other concepts could be used in different regions. However, extension 2017, Taxing mobile connectivity in Sub-Saharan Africa: A review of mobile sector taxation and its considering that the EU approach is based on the application of principles coming from competition law, this impact on digital inclusion 2017 approach may serve as a benchmark for the RWI. 10 6 Revenue Statistics in Africa 2021 | READ online (oecd-ilibrary.org), Revenue Statistics in Asian and Pacific See for example https://op.europa.eu/en/publication-detail/-/publication/6eebf7b9-4833-11e8-be1d- Economies 2020 | en | OECD 01aa75ed71a1/language-en RWI-PHASE 3 REPORT ON REGULATORY TRENDS 7 30 Background and perspective Data governance Data governance is a matter of growing importance for the development of Digital Economy. The World Bank has intensively investigated the issues related to data governance, and has set up a framework for its evaluation, as detailed in the World Development Report 202118. The third edition of the RWI-Phase 3 therefore includes a cluster dedicated to data governance, based on de jure indicators, using existing data from Global Data Diagnostic. The list of Indicators, including the new RWI-Phase 3 Indicators, is presented in Table 2-1 below19. Table 2 1: List of RWI-Phase 3 Indicators CLUSTER INDICATOR Market Openness Regulatory Framework Infrastructure licensing and Licensing Transparency of Award Procedures Sector-Specific Taxation Market Analysis and SMP Regulation Enforcement of SMP regulation Fair Markets RIO Availability Favorability of OTT Regulation State-linked Operators Exclusivity Rights International Access Price Floors on International Traffic Regulation of International Access Spectrum Assignment Procedures Spectrum Pricing Spectrum Management Transparency Spectrum Assignment Levels NRA Independence NRA Financing Regulatory Governance Universal Service Fund Transparency of NRA E-commerce and e-transactions Public and private intent data Data governance Personal data protection Cybersecurity and cybercrime Cross-border data transfers 11 16 https://berec.europa.eu/eng/document_register/subject_matter/berec/annual_work_programmes/9281-berec- See for instance https://www.itu.int/ITU-D/arb/ARO/2011/SpectrumManagement/Presentations/Day%201/Doc4- strategy-2021-2025 Medeisis.ppt, or https://www.acma.gov.au/publications/2017-08/report/international-best-practice-spectrum- 12 The description and market analysis of Surtaxes on International Incoming Traffic may be seen at https://www. management 17 gsma.com/mobilefordevelopment/wp-content/uploads/2014/10/Surtaxes_on_International_Incoming_Traffic_ See for instance https://www.oecd-ilibrary.org/governance/the-governance-of-regulators_9789264209015-en 18 in_Africa_EXSUM_WEB.pdf World Bank. 2021. World Development Report 2021: Data for Better Lives. Washington, DC: World Bank. 13 https://wdr2021.worldbank.org/ https://a4ai.org/good-practices/ 19 14 The list of the 81 Sub-Indicators is provided in appendix. https://www.gsma.com/spectrum/managing-spectrum/ 15 See https://www.fcc.gov/general/best-practices-national-spectrum-management RWI-PHASE 3 REPORT ON REGULATORY TRENDS 8 30 Background and perspective 2.4 RWI-PHASE 3 METHODOLOGY AND ASSESSMENT TOOL The RWI-Phase 3 methodology is based on a robust, transparent and cy in the scoring and calculation of Attainment Levels, based on the scalable framework aiming at objectivity, replicability and consisten- following objectives: OBJECTIVITY: All the calculations of Attainment Levels are based on concrete, observable and documented facts, such as legislation, regulations, publications, as well as press reports (in particular for the de facto Indicators). INDEPENDENCE: The methodology is based on an Assessment Tool which includes a scoring system that is independent from the entity assessed, avoiding self-assessment, and conflicts of interest as well as limiting susceptibility to manipulation and arbitrary decision-making. CONSISTENCY: The Questionnaire and rating methodology aims to ensure consistency of assessment which addresses variations in the form of legislation and regulations between countries, which can be very diverse among the 66 countries targeted in RWI- Phase 3. Similarly, the methodology aims to be sufficiently robust to ensure consistency of results from the different groups/indi- viduals carrying out the analysis for different countries. SCALABILITY: The methodological framework provides for the addition of new Clusters and Indicators, and more countries or regions, without having to change the structure of the database or the calculation engine. In addition, consistency in the calculation of Attainment Levels enables comparability with future editions of the RWI-Phase 3. TRANSPARENCY AND EASE OF USE: All sources and documentation are accessible, and the database allows easy access to informa- tion and sources for each Indicator. As presented in Chart 2-2 below, the methodology includes the The geographical scope covers 66 countries in six regions: Africa definition of 81 Sub-Indicators composing the 25 Indicators of the Western and Central (AFW), Africa Eastern and Southern (AFE), Middle RWI-Phase 3 and the elaboration of a detailed Questionnaire enabling East & North Africa (MNA), Europe & Central Asia (ECA), South Asia independent, objective and transparent scoring based on the 324 (81 x (SAR) and Latin America & Caribbean (LAC) - making RWI-Phase 3 a 4) unique definitions developed to cover the four possible scores (0-3) global product with a total of 5,346 data points. for each Indicator. Chart 2-2: RWI-Phase 3 Geographic Scope and Indicator Clusters 66 Countries in Africa, Middle East, Central & South Asia & Latin America 6 CLUSTERS 25 INDICATORS Regulatory Framework 1 & Licensing 2 Fair Markets 3 International Access 4 Spectrum Management 5 Regulatory Governance 6 Data Governance RWI-PHASE 3 REPORT ON REGULATORY TRENDS 9 30 Background and perspective The Assessment Tool is used to calculate the Attainment Level for each The assessment and scoring of the Indicators was designed by an inde- indicator, cluster or country. The Attainment Level measures the extent pendent team of experts, based on public information such as laws, to which a country has reached an identified level of Good Practice. regulations and other publications. All the data used for the scoring is included in a Structured Knowledge Database (SKD), and accessible via A Good Practice is an observed regulatory practice that receives a detailed index, which includes more than 2,000 entries. international recognition as best practice. In this respect, the widely accepted objectives of telecom regulations are to (i) improve economic The overall framework of the Assessment Tool is described in Chart 2-3 welfare; (ii) address market failures; (iii) promote universal access; (iv) below, showing the structure of Clusters, Indicators and Sub-Indicators. foster competitive markets; (v) improve productive and allocational Each Sub-Indicator corresponds to a precise question with pre-defined efficiency; and (vi) protect consumer rights, including privacy rights. answers used to score each Indicator. Alternatively, a Minimal Practice is a regulatory practice that may have negative effects on the market or a situation where a recognized ‘Good Practice’ regulation has not been adopted or has not yet been enforced. Chart 2-3: Assessment Tool Rating Pre-defined 6 Questionnaire The rating methodology is the following: Answers 3 Each Sub-Indicator is scored on a 0 to 3 range, 0 81 CLUSTERS Good corresponding to a Minimal Practice, 3 to a Good Practice Practice, and 1 and 2 to intermediate practices 2 defined for each Sub-Indicator. Then, for each 25 Indicator, a score is calculated as the sum of the scores for each Sub-Indicator composing this 1 INDICATORS Indicator. The Attainment Level is calculated as the total score divided by the maximum possible score, QUESTIONS expressed in the form of a percentage. Hence, 81 SUB-INDICATORS 0 Minimal Practice this methodology does not give more weight to Indicators that have more sub-indicators and there are no weighting issues between Sub-Indicators, nor between Indicators. RWI-PHASE 3 REPORT ON REGULATORY TRENDS 10 30 Background and perspective 2.5 RWI-PHASE 3 OUTCOMES – ATTAINMENT LEVELS The main outcome of the RWI-Phase 3 is the calculation of Attainment The Attainment Level is calculated for each Indicator and each Cluster, Levels for each of the 6 Clusters and the 25 Indicators. As stated in the while the overall Attainment Level calculated for each country is the terminology section, the Attainment Level measures the extent to which average of the Attainment Levels in each Cluster. Good Practice has been achieved in a particular country and across Chart 2-4 below presents the overall Attainment Levels for all the 66 regulatory themes. This Attainment Level corresponds to the gap be- countries. As shown in this chart, there is a large dispersion of Attain- tween the current regulatory situation and Good Practice, calculated as ment Levels for all regions. a percentage. A 100% score is given when the identified Good Practice has been adopted. Chart 2-4: Overall Attainment Levels by regions The regional averages of the Attainment Levels per Cluster are presented in Chart 2-5 below, and the detailed results per country are provided in Appendix 3. Chart 2-5: Attainment Levels per Region RWI-PHASE 3 REPORT ON REGULATORY TRENDS 11 3 30 Regulatory trends 3 REGULATORY TRENDS The Regulatory Watch Initiative (RWI) was developed to identify the regulatory texts and their enforcement in the 66 countries was conduct- regulatory bottlenecks that are currently holding back the development ed to produce the scores for the RWI-Phase 3. Trends in regulatory de- of broadband services and more generally the digital economy. Using a velopment and regional patterns can also be observed from the results. rigorous methodology based on the use of 81 Sub-Indicators grouped The most important trends that emerged from this work are detailed in into 25 Indicators and 6 Clusters, a detailed analysis of more than 2,000 the following paragraphs. 3.1 Despite the existence of modern and sophisticated (de jure) telecommunications regulation in nearly all RWI- Phase 3 countries, 3.1 there continues DESPITE to be a lack THE EXISTENCE OFof (de facto) AND MODERN enforcement in a majority SOPHISTICATED of JURE the countries (DE ) surveyed. TELECOMMUNICATIONS REGULATION IN NEARLY A LL RWI COUNTRIES, THERE This pattern is widespread, but is most evident in two important CONTINUES TO BE A LACK OF (DE FACTO) The importance of open regulatory frameworks, and the strict enforce- domains – Ex ante market regulation and universal service funding, as ENFORCEMENT IN A MAJORITY OF ment of wholesale regulation of national and international connectivity detailed below. THE COUNTRIES SURVEYED. is even greater in countries with geographical disadvantages, specifical- ly landlocked countries. For instance, Mediterranean MENA countries, Ex ante market regulation. In nearly all the countries, the de jure legal despite the fact that they do not have the most open regulatory frame- and regulatory framework includes solid ex ante competition provi- works, have had large rollouts of low-cost broadband, partly because sions. Such provisions are extremely important for instance for the of the affordable backhaul, as a benefit from the short distances and access to national and international bandwidth, which is a key factor for consequent low transit cost to reach competitive global backbones in providing low cost and abundant bandwidth to the customers. Europe, which is not the case for other regions. Ex ante competition reg- The issue is to promote competition for national and international ulation is a powerful tool based on competition law and jurisprudence, capacity, and - if competition is not possible - establish clear regulation which allows the designation of dominant operators in non-competitive of dominant players, such as open access provisions, wholesale price markets and the imposition of proportionate obligations on these op- regulation and publication of Reference Interconnect/Access Offers21 erators to remedy competition issues. Box 1 below presents the basis for national and international connectivity. used in telecom regulation to address these issues. Box 1: Ex ante and ex post competition regulation in the telecommunications sector In many countries, telecommunications regulation has precisely defined the conditions upon which the national regulatory authority can intervene ex ante in competition issues, which are otherwise addressed by competition authorities following ex post observation of anti-competitive behavior of some players. For instance, these provisions have been introduced by the European Commission* in order to address the case of deregulation of telecom markets that were under monopolies of incumbent operators. Without such provisions, competition in the sector would have been much less effective, due to bottlenecks created by the incumbent operators. These provisions are based on the methods used by the competition authorities, and are based: (i) On the definition of relevant markets, which are markets (1) with high and non-transitory barriers to entry; (2) for which market struc- ture does not tend towards effective competition within a relevant time horizon; and (3) the application of competition law alone would not adequately address the market failure concerned. (ii) On the designation of operators with significant market power (SMP) in these markets, i.e., operators that are not affected by the market response of their customers and their competitors. (iii) On the imposition of proportionate obligations to SMP operators, in order to prevent anti-competitive behavior. (*) See for example: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A52002XC0711(02) https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018XC0507(01)&rid=7 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32020H2245) https://op.europa.eu/en/publication-detail/-/publication/6eebf7b9-4833-11e8-be1d-01aa75ed71a1/language 21 Generally referred to as “RIO” RWI-PHASE 3 REPORT ON REGULATORY TRENDS 12 30 Regulatory trends Good Practices for SMP regulation include both de jure and de facto Another example of limited enforcement is in market access to inter- provisions. national capacities. Abundant and low-cost international capacity is a critical success factor in the development of sustainable competitive De jure provisions result from the existence of legal mechanisms national markets for broadband services. Historically, international gate- imposing ex ante competition regulation on electronic communications ways have been under national or state-owned monopolies, mainly for markets. For 43 countries, sectoral legislation includes provisions for security and financial reasons. There has been a significant evolution in such market analysis mechanisms, with the objective to promote fair the de jure regulatory frameworks, with the abolition of exclusive rights22 competition. on international access in nearly all countries, and only 6 countries However, the de facto enforcement of such provisions is observed in still maintain such exclusive rights . However, de facto Good Practice far fewer countries: only 6 countries (Cap Verde, Mauritania, Mo- requires the enforcement of open access principles and the publication rocco, Mozambique, Pakistan, Peru) have effectively enforced all of a Reference Interconnect/Access Offer (RIO) for dominant operators the required decisions on a regular, clear and transparent basis, as detailing the technical and pricing aspects of access to international presented in Chart 3-1 below. capacities, but only 3 countries23 have reached de facto Good Practices in this respect. Chart 3-1: Ex ante Market Regulation The second domain is universal service, for which the legal basis has been widely adopted, however the realization of projects has taken place in only half of the countries. The legal basis and good practices for universal service have been largely detailed and published, in par- ticular in Europe24, in the US25, and other regions such as the Southern African Development Community (SADC)26. Three levels of definition and enforcement of universal service can be observed. 1 In practice the existence of a broad and comprehensive definition of universal service in the regulatory framework varies from no definition, to a definition including all kinds of telecommunication services. A total of 74% of RWI-Phase 3 countries have included in their sectoral law a broad definition of universal service, including at least basic data services, and among the 26% remaining RWI- Phase 3 countries, 20% have not defined the services to be included In more detail, the enforcement of these provisions requires several de- in the universal service. cisions and actions to be taken by national regulators, which in practice are rarely implemented: 2 The operationalization of a financing mechanism has taken place in 71% of RWI-Phase 3 countries, with at best, a pay or play mech- anism, allowing for direct financing of projects by the operators in » Regular publication of decisions on market anal- only 15 countries. ysis (24% of RWI-Phase 3 countries), with a clear 3 The existence of financed projects is evidence of the concretization and transparent methodology (18% of RWI-Phase of universal service. Despite the existence of legal provisions, and 3 countries), leading to the determination of rele- eventually the adoption of a functioning financing mechanism, vant wholesale and retail markets. only 50% of RWI-Phase 3 countries have effectively financed and » Regular publication of decisions on dominant op- implemented universal service projects. erators (24% of RWI-Phase 3 countries) with clear In addition, there is generally very limited transparency on the man- and transparent obligations (20% of RWI-Phase 3 agement of the associated Universal Service Funds (USF), with only countries). 19 countries publishing details on the financed projects with relevant » Regular publication of a Reference Interconnect financial information. and Access Offer (26% of RWI-Phase 3 countries) with appropriate content (14 countries). 22 25 Algeria, Burundi, Cameroon, Burundi, Ethiopia and Lebanon https://pdf.usaid.gov/pdf_docs/pnaeb219.pdf 23 26 Niger, Togo and Pakistan https://www.itu.int/ITU-D/projects/ITU_EC_ACP/hipssa/Activities/SA/docs/SA-2.2/SADC_Guidelines_US.pdf 24 22 See for instance https://digital-strategy.ec.europa.eu/en/policies/eu-electronic-communications-code Algeria, Burundi, Cameroon, Burundi, Ethiopia and Lebanon RWI-PHASE 3 REPORT ON REGULATORY TRENDS 13 30 Regulatory trends 3.2 Telecommunication markets across RWI-Phase 3 countries still present significant regulatory barriers to entry for new operators, primarily with respect to licensing schemes. Regulatory barriers to entry refer to a set of constraints in the regulatory regimes, access to licensing information, the transparency of procedures and fees, the ability to invest in infrastructure, etc. that constitute obstacles to the establishment and operations of electronic communications networks and services. For instance, the enforcement of open competition principles, the provision of fixed retail ser- vices, passive infrastructure or wholesale backbone services should be as open as possible to encour- age investment and foster competition. The RWI-Phase 3 shows that 4 major issues are evident among the countries surveyed. 1 In 79% of the RWI-Phase 3 countries, an individual license is required 2 In 74% of RWI-Phase 3 countries, an individual license is also re- for all retail services, including all services not using IMT frequen- quired for the provision of wholesale services, such as the operation of cies, such as fixed voice and Internet services. In most open markets, national backbones. Within the remaining 26% of RWI-Phase 3 countries, such as in Europe, there are no regulatory barriers for these services, wholesale operations are also partially open, being subject to a class for which only a declaration is required (or even no declaration, in the license or authorization regime. Many countries do not have a separate UK or France). For the remaining 21% RWI-Phase 3 countries, the regulation, license or authorization category for wholesale services. market is only partially open, since an authorization is still required, 3 Although passive infrastructure is not stricto sensu a telecom although this cannot be refused except in some specific conditions. service, it is recognized as having a large potential positive impact on the operators, however an individual license or an authorization for Chart 3-2: Regulatory barriers to entry (%countries) the provision of passive infrastructure is required in 64% of RWI- Phase 3 countries. 4 While open competition is known as a Good Practice for granting mobile spectrum27, the granting of licenses or authorizations should be automatic when no scarce resources are at stake. Nevertheless it is observed that in 70% of RWI-Phase 3 countries these authorizations still require a complex and discretionary process from the NRA. 27 Generally through auctions, or beauty contests RWI-PHASE 3 REPORT ON REGULATORY TRENDS 14 30 Regulatory trends 3.3 National Regulatory Authorities (NRAs) have been established in all RWI-Phase 3 countries, but in most cases are not fully independent, and their accountability is limited. National Regulatory Authorities (NRA) have been established in all the countries, with clear missions and competencies stated in the sectoral law or in a specific law establishing the NRA. However, there are some factors that potentially affect the independence of the NRA, from the nomination and functioning of the board to its financing28. » Board members are usually nominated only by the government, or the President of the State, or various bodies including the Parliament. However, only 29% of RWI-Phase 3 countries have established a more diversified way of nominating board members, among which 6% of RWI-Phase 3 countries have imposed an open process with calls for candidates. » The second issue is the duration of mandates. Good Practice here is generally based on non-renewable and non-revocable mandates, with a 3 to 5 years duration. This is only the case for 15% of RWI-Phase 3 countries. For the other countries, the main practice is general- ly the existence of renewable mandates, or the possibility to revoke members in a lesser extent. » Another issue is the presence of criteria for board members nomination. There are 2 types of criteria: absence of conflict of interest / independence, and qualification criteria. Independence of board members is clearly a prerequisite for sectoral regulation, and qualifica- tion requirements for board members is a Good Practice for the decision-making process. However, only 55% of RWI-Phase 3 countries impose both types of criteria. Interestingly, none of the 66 RWI-Phase 3 countries Good Practice for annual reports, etc. Good Practices for transparency are based on the all the NRA independence related criteria. publication of all this information on the NRA’s website. Among the 66 countries, there is full transparency for only 3 countries (India, Nepal Another issue is the overall transparency of the NRA, concerning and Peru), and partial transparency for only 23 countries. public access to all relevant documentation on regulations in place, the availability of up-to-date market data, information on board members, 28 These issues have also been addressed by the ITU, though with different methodologies (https://www.itu.int/en/ITU-D/Regulatory-Market/Pages/Regulatory-&-economic-metrics.aspx) RWI-PHASE 3 REPORT ON REGULATORY TRENDS 15 30 Regulatory trends 3.4 Spectrum management remains sub-optimal due to a lack of transparency both in assignment procedures and mobile spectrum valuation. Effective management of radio spectrum is a key issue for the development of broadband services, particularly in emerging markets where fixed infrastructure is more limited, and thus mobile services are the primary means for some countries to reduce the digital divide29. However, there are many obstacles that potentially hinder access to spectrum, such as the price for mobile wavebands, the ease of access to recurring spectrum (i.e., spectrum used for fixed radio services or microwaves), or the availability of information on procedures, fees, and available spectrum. The first and most important issue regarding spectrum management The second issue is in access to information regarding recurring is the assignment method and price for mobile spectrum. Good Prac- spectrum fees. This spectrum is used by the operators to provide fixed tices in this matter are the assignment of mobile spectrum through wireless access or to connect their base stations with microwave links. transparent, competitive and open auctions or beauty contests, and These frequencies are generally allocated on an on-going basis, and market-based prices (auctions) with bids higher than the reserve Good Practices are the publication of detailed and up-to-date informa- price. The RWI-Phase 3 shows that there are only 10 countries (15% of tion regarding assignment procedures, fees and already assigned fre- RWI-Phase 3 countries) which have attained the Good Practice stan- quencies, and access to on-line forms for requesting new frequencies. dard in this area30, with 4 of these being in Eastern & Southern Africa, Only 9% of RWI-Phase 3 countries have fully achieved Good Practice and 3 in South Asia. Though not reaching the Good Practice, about 5% (Bhutan, Kenya, Nigeria, Peru, Sierra Leone, South Africa), while 33% of RWI-Phase 3 countries still use open auctions or beauty contests, achieved partial attainment of the same standard, as presented in Chart but without bids higher than the reserve price, and 8% of the RWI-Phase 3-4 below. This indicates the percentage of countries publishing up-to- 3 countries used closed auctions or beauty contests, as displayed in date and complete information, or partial or not-up-to-date information Chart 3-3 below. vs. countries using transparent attribution procedures with or without on-line forms Chart 3-3: Percentage of countries reaching Good Practice for mobile spectrum assignment31 Chart 3-4: Percentage of countries attaining Good Practice for the assignment of recurring spectrum32 29 The economic issues related to radioelectiric spectrum have been analyzed both by international institutions such as the GSMA (https://www.gsma.com/spectrum/managing-spectrum/), the ITU (https://www.itu.int/ITU-D/arb/ ARO/2011/SpectrumManagement/Presentations/Day%201/Doc4-Medeisis.ppt) and economists such as Martin Cave (https://www.cambridge.org/core/books/spectrum-management/A13E6D8152742315363310BF76C6B093 or http://web1.see.asso.fr/ICTSR1Newsletter/No004/RS%20Management%20-%202_title-42.pdf), F. Benedetto, L. Mastroeni and G. Quaresima, “Auction-based Theory for Dynamic Spectrum Access: a Review,” 2021 44th International Conference on Telecommunications and Signal Processing (TSP), Brno, Czech Republic, 2021, pp. 146-151, doi: 10.1109/TSP52935.2021.9522600, B. Somdyala, S. Rananga, L. Mfupe, M. Masonta and F. Mekuria, “Spectrum regulation for future internet networks in developing economies,” 2017 IST-Africa Week Conference (IST-Africa), Windhoek, Namibia, 2017, pp. 1-12, doi: 10.23919/ISTAFRICA.2017.8102342. and others. 30 Afghanistan, Algeria, Bangladesh, Colombia, Ghana, India, Kenya, South Africa, Tanzania and Zambia 31 The two regions ECA and LAC have been excluded from this chart due to the limited number of surveyed countries. 32 The two regions ECA and LAC have been excluded from this chart due to the limited number of surveyed countries. RWI-PHASE 3 REPORT ON REGULATORY TRENDS 16 30 Regulatory trends 3.5 Remaining State-linked operators are in some cases altering market competition either through de jure exclusive rights or de facto market positions. The continued presence of State-Linked Operators (SLOs) in a relatively large number of countries continues to raise concerns over whether and to what extent SLOs alter competition due to a disproportionately large market share, granted prior to market liberalization or privatization, as the former state monopoly participant. Notably, as detailed in Table 3-1 below, there remain 4 countries (6% of RWI-Phase 3 countries) with de jure monopolistic operators in certain mar- ket segments33, 3 of them being in the Middle East & North Africa region. In 12 other countries (18% of RWI-Phase 3 countries), there are SLOs with a dominant position in some markets, without strict regulation of their dominance in most of the cases. Table 3-1 also indicates for each country the Attainment Level of the Fair Market Cluster. Table 3 1: SLOs with de jure exclusive rights or dominant positions Existence of de jure Existence of Region exclusive rights on de facto dominant Fair Market Attainment Level SLOs SLOs Algeria Yes 33% MNA Lebanon Yes 28% Djibouti Yes 14% The national backbone company (SBIN) is oper- ating as the sole operator on national capacities, Benin 89% and has been placed under a management contract with Orange/Sonatel AFW The national backbone ECOWAN is part of the The Gambia SLO Gamtel with price control obligations and is 46% dominant De facto monopoly of Sotel for fixed and interna- Chad 20% tional transmission Congo Telecom (Congotel) is fully owned by the Republic of Congo State and is dominant in fixed telephony and fiber 66% optic services The incumbent will not be subject to competitive Ethiopia 39% bidding for its license Legacy incumbent operator retains a de-facto AFE Mozambique monopoly for fixed line voice and data services 58% as no other operators have entered the market The backbone is managed and operated by the Tanzania Telecommunications Corporation Tanzania (TTCL Corporation) on behalf of the government, 44% through the ministry of Communication Science and Technology (MCST) RWI-PHASE 3 REPORT ON REGULATORY TRENDS 17 30 Regulatory trends Existence of de jure Existence of Region exclusive rights on de facto dominant Fair Market Attainment Level SLOs SLOs Bangladesh Yes 44% Special privilege given by the central bank with Nepal regard to Forex use without NTA/GoN recom- 27% mendation up to a certain limit There are two state owned operators, which are SAR Pakistan operated and managed by government: NTC & 71% SCO The state linked operator operates across the val- Sri Lanka ue chain and runs and operates the NBN. State 19% linked is dominant in fixed and backhaul Cellcos and ISPs have continued to be prevented Tajikistan from utilizing their own direct international data 7% traffic links ‘on security grounds’ ECA The regulator ACRU designated both Ucell and the SLO Uzbektelecom as dominant operators Uzbekistan 26% in the mobile voice services and mobile data transmission (internet) services markets RWI-PHASE 3 REPORT ON REGULATORY TRENDS 18 30 Regulatory trends 3.6 Following an earlier period of blockages and heavy taxation, Over-The-Top (OTT) services are now free to operate in all RWI-Phase 3 countries, but net neutrality remains an important challenge. Free operation of OTTs was a serious issue in number of countries until The emergence and development of OTTs may be understood looking recently, as a consequence of blocking measures or significant taxation at the concept of disruptive innovation, introduced and developed by that adversely affected the market43. Joseph Bower and Clayton Christensen44. Box 2: The concept of disruptive innovation Christensen defined a disruptive innovation as satisfying two conditions: (i) Disruptive innovations originate in low-end or new-market footholds. Low-end footholds exist because incumbents typically try to provide their most profitable and demanding customers with ever-improving products and services, and they pay less attention to less-demanding customers. In the case of new-market footholds, disrupters create a market where none existed. Put simply, they find a way to turn no consumers into consumers. (ii) Disruption theory differentiates disruptive innovations from what are called “sustaining innovations.” Disruptive innovations, on the other hand, are initially considered inferior by most of an incumbent’s customers. Typically, customers are not willing to switch to the new offering merely because it is less expensive. Instead, they wait until its quality rises enough to satisfy them. Once that’s happened, they adopt the new product and happily accept its lower price. (This is how disruption drives prices down in a market). According to Christensen, this restrictive definition matters because only disruptive innovation constitutes a potentially lethal threat to incumbent players. As an example, Uber, despite all that has been said, is not a disruptive innovation for the taxi industry. In a paper presented in 201345, Palekar, Weerasinghe and Sedera customers and offer them services that competed with the traditional demonstrated that mobile apps are a disruptive innovation: “Mobile services (voice, text and data) offered by operators. However OTTs communication apps are new-market disruptive innovations be- also significantly contributed to the growth in the use of data services. cause they satisfy the following conditions (in comparison to existing These challenges justified, according to the NCA, the need to ensure incumbent services): (i) initially, inferior attributes but highly valued by an appropriate regulatory balance and a level playing field in terms of mainstream consumers, (ii) value prepositions that attract new custom- regulatory compliance. The NCA had also used the traditional argument ers thereby creating new markets, (iii) available free or at extremely low of the threat to national security in order to call for regulation of OTTs. costs, and (iv) penetrates an established niche market in a bid to make Nevertheless the government recalled its position on new technologies, it mainstream”. stating that technological development is inevitable and cannot be reg- From this perspective, it appears that OTTs have been a truly disruptive ulated, and that the government will not implement policies to restrict market innovation because they created new markets by providing the use of OTTs. services that were not offered initially by Telcos, such as enhanced More recently, in 2019, Nigeria’s NCC (“Nigerian Communications Com- communication services. Creating new customers for these new mission”) was asked about regulating OTTs47. The recurring position services, they encouraged existing customers to progressively switch of the NCC, according to its Director General, has been not to regulate to OTT services as the quality has increased and the value proposition OTTs, but rather to encourage operators to evolve their business model became more attractive. to find new sources of growth. Sectoral regulators have also analyzed the impact of OTTs on the mar- The situation has since continued in this direction, and in 60 countries, ket and questioned the opportunity to regulate the OTTs. For instance, there are no blocking measures or specific taxes for Over-the-Top (OTT) there were debates in Ghana46, where the national regulatory authority, services, except some minor discriminatory measures from some oper- the NCA, stated that OTTs constituted an unfair competition to tradi- ators such as Facebook Free Basics48. Blocking measures are in place, tional operators, as they used operators’ infrastructure to reach their or have been recently in place, in only 4 countries among the 66 RWI- 43 For instance in Morocco (https://medias24.com/2016/01/06/blocage-de-la-voip-au-maroc-des-raisons-clairement-commerciales/), Uganda (https://www.theguardian.com/global-development/2019/feb/27/millions-of-ugandans-quit- internet-after-introduction-of-social-media-tax-free-speech, Zambia (https://rsf.org/en/after-uganda-benin-and-zambia-impose-worrying-tax-social-networks), Benin (https://www.africanliberty.org/2018/09/25/tax-imposed-on-social- media-usage-in-benin-republic-has-been-revoked-after-citizens-petition/) 44 Harvard Business review, December 2015, What Is Disruptive Innovation? By Clayton M. Christensen, Michael E. Raynor and Rory McDonald 45 Palekar, S, Weerasinghe, K and Sedera, D 2013, 'Disruptive innovation of mobile communication apps', in Hepu Deng and Craig Standing (ed.) ACIS 2013: Information systems: Transforming the Future: Proceedings of the 24th Australasian Conference on Information Systems, Melbourne, Australia, 4-6 December 2013, pp. 1-10. 46 https://www.biztechafrica.com/article/government-rules-out-ott-regulation-ghana/11345/ and https://www.biztechafrica.com/article/nca-review-impact-ott-services-ghanas-telecom-indu/11326/ 47 https://guardian.ng/technology/telecoms/ncc-weighs-regulation-options-on-ott-as-stakeholders-demand-action/ RWI-PHASE 3 REPORT ON REGULATORY TRENDS 19 30 Regulatory trends Phase 3 countries (DRC, Egypt, Sudan and Tajikistan). In addition, there on net neutrality in the regulatory framework. Among the remaining is some specific taxation in 2 countries49 (Cameroon and Sri Lanka). 8 countries, only 2 countries (Sao Tome and Principe and Seychelles) have effectively implemented net neutrality provisions with specific The operation of OTTs relies on principles of net neutrality, aimed at obligations for the operators, with monitoring of compliance. ensuring the absence of discrimination in internet usages. To date, for 88% of RWI-Phase 3 countries, there are no or very basic provisions Chart 3-5: OTT operations 48 https://www.theverge.com/2022/1/25/22900924/facebooks-free-internet-less-developed-costing-users-wsj) 49 Uganda recently (July 2021) dropped its counterproductive social media tax RWI-PHASE 3 REPORT ON REGULATORY TRENDS 20 4 30 A1 - definitions 4 APPENDIX 1: DEFINITIONS The RWI-Phase 3 Terminology is aimed at providing clear definitions of the concepts used in the Regulatory Watch Initiative. The definitions provid- ed here remain synthetic, since the concepts are fully explained and detailed in the following chapters. The Assessment Tool is the set of Clusters, Indicators, Sub-Indicators and Questionnaire, Assessment Tool including the calculation of the Attainment Level for each Indicator, Cluster and country, from the scoring of each Sub-Indicator. The Attainment Level measures the extent to which a Good Practice has been achieved in a particular country and across regulatory themes. This Attainment Level corresponds Attainment Level to the gap between the current regulatory situation and the Good Practice, calculated as a percentage. A 100% score is given when the identified Good Practice has been adopted. A Cluster is a regulatory thematic area used in the RWI-Phase 3. There are currently six Cluster Clusters in RWI-Phase 3: Licenses and authorizations, Fair markets, International access, Spectrum Management, Regulatory governance and Data governance. A Good Practice is an observed regulatory practice that is recognized as such and results in positive dynamics to market development. Good Practices are identified in most devel- oped countries. Good / Minimal Practice Alternatively, a Minimal Practice is a regulatory practice that may have negative effects on the market or a situation where a recognized ‘Good Practice’ regulation has not been adopted or has not yet been enforced. An Indicator is a constituent of a Cluster. There are currently 25 Indicators in the RWI- Indicator Phase 3. The Indicator is the smallest level for which an Attainment Level may be calculat- ed. The Indicators are regrouped in the Clusters. The Questionnaire is a list of questions which are scored by experts. Each question Questionnaire corresponds to a Sub-Indicator and has four pre-defined answers corresponding to the [0-3] rating, 3 being the Good Practice and 0 the Minimal Practice. The RWI-Phase 3 countries are the 66 countries across 6 regions that have been included RWI-Phase 3 Countries in the RWI-Phase 3. The Structured Knowledge Database (SKD) contains all legal and regulatory information Structured Knowledge Database used to administrate the Questionnaire. It contains more than 2,000 documents organized per country and is accessible via a detailed index. A Sub-Indicator is an elementary constituent of an Indicator. There are currently 81 Sub-In- Sub-Indicator dicators in the RWI-Phase 3. The Sub-Indicators are used for the scoring (each Sub-Indica- tor is scored in a [0-3] range) in an unambiguous manner. RWI-PHASE 3 REPORT ON REGULATORY TRENDS 21 5 30 a2 - list of indicators and sub-indicators 5 APPENDIX 2: LIST OF INDICATORS AND SUB-INDICATORS Cluster Indicator Sub-indicator Existence of a General Authorization regime Technological neutrality Market Openness Minimal conditions Regulatory barriers to entry related to the licensing schemes Regulatory barriers related to rigidity of award procedures Openness for passive infrastructure Openness for wholesale operations Infrastructure licensing Infrastructure sharing Transparency of right of way (ROW) Information relative to categories of licenses and authorizations Regulatory Framework Information relative to procedures, including forms and guidelines Transparency of Award and Licensing Information relative to licensing and authorization fees Procedures Information relative to existing operators and services providers having been granted an authorization or a license Transparency of sector specific taxation Existence and level of consumer taxes on usage Existence of taxes on international voice traffic Existence of taxes on OTTs Sector-Specific Taxation Existence and level of consumer taxes on mobile payment Existence and level of consumer taxes on handsets Allocation of consumers and operators taxes to the Telecommunications sector RWI-PHASE 3 REPORT ON REGULATORY TRENDS 22 30 a2 - list of indicators and sub-indicators Cluster Indicator Sub-indicator Provisions for market analysis in the legal and regulatory framework, compliant with international standards Market Analysis and SMP Regu- Decisions taken by the regulatory authority to specify the methodology for lation market analysis and SMP assessment, and enforce legal and regulatory provisions Publication of decisions of effective relevant markets Transparency of the methodology for the identification of relevant markets Soundness of relevant wholesale markets Enforcement of SMP regulation Soundness of relevant retail markets Publication of decisions on dominant operators Transparency and obligations for dominant operators Publication of an up-to-date RIO (Reference Interconnect and Access Offer) RIO Availability Fair Markets Appropriate content of the RIO Existence of Net neutrality provisions in the legal framework Favorability of OTT Regulation Absence of restrictions on OTT (Over-The-Top) players Existence of de jure exclusive or special rights in the legal and regulatory framework for State-linked operators State-linked Operators Existence of de facto reduced obligations for State-linked operators Transparency Absence of exclusivity rights on international gateways Exclusivity Rights Open access principles for international access Price Floors on International Absence of price floors on incoming international voice traffic Traffic Full inclusion of international wholesale in the market analysis Regulation of International Access Publication of a Reference access offer for international capacities Existence of transparent and open auctions or beauty contest for the assignment of mobile access spectrum Spectrum Assignment Procedures Efficiency of procedure for assignment of frequencies other than mobile access bands One-off fees for frequencies assigned for mobile access Spectrum Pricing Transparency for fees of radioelectric spectrum other than mobile Spectrum access bands Management Frequencies for mobile access bands Assignment procedures for radioelectric spectrum other than mobile Transparency access bands Assignment of frequencies Spectrum assigned in the 2G/3G/4G IMT bands Spectrum Assignment Levels Spectrum assigned in the Digital Dividends bands (800 and 700 MHz) RWI-PHASE 3 REPORT ON REGULATORY TRENDS 23 30 a2 - list of indicators and sub-indicators Cluster Indicator Sub-indicator Procedures of nomination and revocation of board members, including the existence of a Board NRA Independence Duration and revocation of board members’ mandates Criteria for nomination of board members Absence of government member or representative in the board Existence of a dedicated budget NRA Financing Source of NRA revenues Publication and audit of NRA Accounts Legal provisions for Universal service Financing mechanism through sector contribution and pay or play Regulatory mechanism Governance Universal Service Fund Cost of Universal Access projects Existence of financed projects Publication of an annual report with accounts and description/status of projects Publication of all legal and regulatory texts on the NRA’s website Publication of the list and qualification of board members on the NRA’s website Transparency of NRA Publication of an up-to-date and comprehensive market observatory on the NRA’s website Publication of an up-to-date annual report on the NRA’s website Legal framework for electronic transactions E-commerce and e-transactions Technological neutrality Digital ID system for e-services Semantic interoperability for public data Open Data Public and private intent data Access to information (ATI) Data portability Authentication through ID for private sector Legal basis for personal data protection Data Government exception to liability Governance Personal data protection Purpose limitation Data Management Data protection authority / office (DPA/DPO) Data security Cybersecurity and cybercrime Cybersecurity standards Computer Emergency Response Team (CERT) Transfer of personal data between countries Cross-border data transfers Conditions under which local personal data can be transferred to non-do- mestic third parties (Adequacy approach or Accountability approach) RWI-PHASE 3 REPORT ON REGULATORY TRENDS 24 6 30 a3 - LIST OF RWI-PHASE 3 COUNTRIES 6 APPENDIX 3: LIST OF RWI-PHASE 3 COUNTRIES Region Country Benin Burkina Faso Cabo Verde Cameroon Central African Republic Chad Congo, Republic of Cote d’Ivoire Equatorial Guinea Gabon Gambia, The AFW Africa Western and Central Ghana Guinea Guinea-Bissau Liberia Mali Mauritania Niger Nigeria Senegal Sierra Leone Togo RWI-PHASE 3 REPORT ON REGULATORY TRENDS 25 30 a3 - LIST OF RWI-PHASE 3 COUNTRIES Angola Burundi Comoros Congo, Democratic Republic of Ethiopia Kenya Madagascar Malawi Mauritius Mozambique AFE Africa Eastern and Southern Rwanda Sao Tome and Principe Seychelles Somalia South Africa South Sudan Sudan Tanzania Uganda Zambia Zimbabwe Algeria Djibouti Egypt, Arab Republic of Iraq MNA Middle East & North Africa Jordan Lebanon Morocco Tunisia West Bank and Gaza Afghanistan Bangladesh Bhutan India SAR South Asia Maldives Nepal Pakistan Sri Lanka Kazakhstan ECA Europe & Central Asia Tajikistan Uzbekistan Argentina LAC Latin America & Cari Colombia Peru RWI-PHASE 3 REPORT ON REGULATORY TRENDS 26 7 30 A4 - Attainment levels 7 APPENDIX 4: ATTAINMENT LEVELS The Attainment Levels are presented below for each Cluster, according to the scoring methodology exposed in section 2.4 of this document. Regulatory Interna- Spectrum Framework Fair Regulatory Data RWI-Phase 3 tional Manage- and Markets Governance Governance Access ment Licensing Benin 62% 54% 71% 89% 26% 72% 13% Burkina Faso 57% 53% 71% 56% 46% 59% 11% Cabo Verde 64% 50% 90% 94% 29% 54% Cameroon 33% 35% 46% 33% 7% 42% 5% Central African Republic 51% 60% 43% 56% 54% 44% Chad 27% 28% 20% 28% 9% 48% Congo 52% 51% 66% 39% 46% 59% Cote d’Ivoire 63% 36% 84% 94% 29% 69% 13% Equatorial Guinea 37% 54% 31% 33% 29% 37% Gabon 57% 62% 64% 83% 22% 55% 7% Gambia, The 50% 55% 46% 72% 17% 60% 18% Ghana 46% 41% 37% 33% 58% 59% 13% Guinea 50% 51% 74% 56% 14% 56% Guinea-Bissau 38% 31% 32% 56% 18% 52% Liberia 36% 43% 33% 39% 35% 31% 4% Mali 56% 49% 66% 67% 33% 66% 9% Mauritania 66% 58% 90% 61% 53% 65% Niger 56% 48% 79% 67% 19% 70% Nigeria 72% 61% 72% 67% 83% 77% 16% Senegal 63% 43% 90% 94% 25% 61% 10% Sierra Leone 48% 53% 38% 56% 33% 61% 4% Togo 71% 65% 63% 100% 59% 70% 10% Angola 47% 49% 33% 67% 39% 47% 9% Burundi 33% 47% 23% 0% 29% 66% Comoros 37% 48% 36% 17% 44% 41% Democratic republic of Congo 40% 53% 9% 56% 31% 49% 2% Ethiopia 35% 46% 39% 33% 11% 47% 4% Kenya 63% 47% 57% 67% 75% 71% 13% Madagascar 40% 44% 41% 28% 26% 61% 8% Malawi 58% 51% 50% 67% 42% 82% 5% Mauritius 50% 75% 30% 22% 43% 78% 12% Mozambique 63% 61% 58% 67% 50% 79% Rwanda 54% 68% 53% 56% 28% 65% 8% Sao Tome and Principe 51% 46% 60% 61% 29% 58% Seychelles 46% 45% 62% 61% 11% 51% Somalia 33% 40% 30% 50% 20% 26% South Africa 75% 70% 64% 83% 72% 84% 5% RWI-PHASE 3 REPORT ON REGULATORY TRENDS 27 30 A4 - Attainment levels Regulatory Interna- Spectrum Framework Fair Regulatory Data RWI-Phase 3 tional Manage- and Markets Governance Governance Access ment Licensing South Sudan 25% 40% 23% 0% 13% 48% Sudan 41% 48% 13% 50% 33% 60% Tanzania 61% 48% 44% 83% 74% 56% 6% Uganda 51% 46% 53% 56% 46% 56% 10% Zambia 66% 65% 43% 67% 72% 83% Zimbabwe 55% 53% 36% 67% 40% 80% Algeria 49% 50% 33% 50% 63% 50% Djibouti 17% 13% 14% 8% 17% 32% Egypt 40% 38% 23% 72% 38% 31% 7% Iraq 30% 21% 30% 50% 13% 36% 3% Jordan 49% 52% 64% 50% 21% 57% 7% Lebanon 43% 64% 28% 44% 29% 50% 7% Morocco 54% 43% 77% 39% 63% 47% 11% Tunisia 56% 32% 60% 67% 64% 56% 10% West Bank and Gaza 29% 39% 23% 67% 0% 15% Afghanistan 55% 57% 47% 83% 42% 46% 2% Bangladesh 56% 50% 44% 61% 51% 71% 8% Bhutan 68% 73% 39% 100% 68% 61% India 64% 71% 43% 72% 61% 74% 9% Maldives 43% 63% 27% 44% 38% 42% Nepal 54% 53% 27% 61% 46% 85% 7% Pakistan 76% 70% 71% 89% 58% 90% 7% Sri Lanka 42% 45% 19% 67% 15% 62% 6% Kazakhstan 38% 35% 57% 83% 0% 15% 7% Tajikistan 13% 20% 7% 33% 6% 2% 7% Uzbekistan 22% 28% 26% 56% 0% 0% 9% Argentina 57% 57% 46% 67% 54% 63% 15% Colombia 63% 43% 76% 50% 59% 84% 13% Peru 80% 71% 84% 78% 83% 84% 13%   RWI-PHASE 3 REPORT ON REGULATORY TRENDS 28 30 A4 - Attainment levels ATTAINMENT LEVELS PER CLUSTER RWI-PHASE 3 REPORT ON REGULATORY TRENDS 29 30 A4 - Attainment levels ATTAINMENT LEVELS PER CLUSTER RWI-PHASE 3 REPORT ON REGULATORY TRENDS 30 30 A4 - Attainment levels ATTAINMENT LEVELS PER CLUSTER