1. Copyright, 1996 © Dale Carnegie & Associates, Inc. WTO Agreement on Basic Telecommunication Services - Sri Lanka's Experience on Interconnection and Pricing – Case Study By-Sumathi Dharmawardena, State Counsel – Attorney General’s Department Legal Advisor - TRCSL

2. WTO Agreement Section 2.1 “This section applies to linking with suppliers and providing public telecommunications, transport networks or services in order to allow the users of one supplier to communicate with users of another supplier and to access services provided by another supplier, where specific commitments are undertaken”

3. Section 5(h) of the Telecommunication Act, No. 25 of 1991 as amended, ‘ to ensure compliance by operators with international or other obligations entered in to by the Government of Sri Lanka in relation to telecommunication system;’

4. Pricing - as per the policy laid down in the WTO Agreement Member countries have to provide a mechanism for fair competition between the operators. Achieving a fair price for interconnection services is the most important instrument in facilitating a competitive telecom market. Without a reasonable price for interconnection there will be no competition because the incumbent operator has the monopoly. New entrants look forward for National Regulator to create a mechanism for this but TRCSL failed to make interconnection determination based on cost.

5. Interconnection When two telecom networks interconnect, each operator levies charges to the other for calls terminated in their network. In the telecommunication market the cost that the new entrant has to pay the incumbent operator is much higher than vice versa. This disparity in interconnection charges & the imposition of highly unfair commercial terms to new entrants makes market competition difficult. Therefore, the WTO has set out principles pertaining to it.

6. WTO principles on Interconnection Interconnection must be provided at any technically feasible point in the network On non–discriminatory terms, rates & of a quality no less favorable than for the incumbents own supply In a timely fashion & on terms that are transparent & reasonable On an unbundled basis so that a buyer doesn’t pay for unnecessary services

7. Even though Sri Lanka is a signatory to the WTO Agreement, Sri Lanka has thus far not ratified the same by incorporating the provisions of the WTO Agreement into the Telecommunication Act and having the same approved by Parliament.

8. Sec.5 (l) of the Sri Lanka Telecommunications Act No. 25 of 1991 as amended “ to approve interconnection charges and charges for calls between licensed interconnected telecommunication systems where operators of those systems are able to agree on such charges, and to determine such charges where operators are unable to agree;” This section was inadequate to facilitate interconnection between the Operators

9. Lacuna in the prevailing Legislation The Act did not provide for directions to facilitate interconnection between the Operators based on the commitments made by the Government of Sri Lanka in WTO - Fourth Protocol to the General Agreement on Trade in Services. Interconnection was not made mandatory by the said Act. The Act failed to allow the Regulator to decide Interconnection charges on a cost oriented basis, in the event parties failed to agree on same. The Act also failed to provide a mechanism to resolve disputes pertaining to Interconnection in Sri Lanka.

10. Licensed Operators Prior to the Liberalisation of the International Telecom Market in Sri Lanka Sri Lanka telecom Limited (Incumbent ) Lanka Bell (WLL Operator) Suntel (WLL Operator) Dialog (Mobile Operator) Celltel (Mobile Operator) Mobitel (Mobile Operator) Hutchison (Mobile Operator) Ceycom (Facilities Based Data Operator) LankaCom (Facilities Based Data Operator) Lanka Internet (Facilities Based Data Operator) Lanka Payphone (Pay Telephone Operator) Tritel (Pay Telephone Operator)

11. After the Liberalisation of the International Market in February 2003, TRCSL issued 27 new EGO Licences to the following; The two WLL Operators The three Mobile Operators The Facility Based Data Operators New entrants

12. The Interconnection Rules of 2003 Rules made by the Telecommunications Regulatory Commission of Sri Lanka in terms of section 68 of of the Sri Lanka Telecommunications Act No. 25 of 1991 as amended by Act No. 27 of 1996, and published in the Government Extraordinary Gazette No. 1278/8 of 07 th March 2003.

13. Applicability Rule 2 –These Rules shall apply to every connectable operator who is authorised to connect to any interconnected telecommunications system, in accordance with a licence issued under section 17 of the Act.

14. Interconnection - a mandatory requirement Rule 4 An interconnection service SHALL BE MANDATORY among connectable operators and shall be provided on an efficient and non discriminatory and cost oriented basis. Rule 5 (1) Where an Access Seeker requests an Access Provider for an interconnection service SUCH ACCESS PROVIDER SHALL make every endeavor to provide such service. TIP Identify and organize your key points

15. Procedure To commence negotiations the Access Seeker issues notice to the Access Provider – Rule 5 (2) (b) On receipt of the Access Seeker’s request, the Access Provider shall WITHIN 5 WORKING DAYS of the receipt of same acknowledge its receipt and provide the information - Rule5 (5) (a)-(d) Prior to commencing the negotiations the Access Seeker and Access Provider shall sign an agreement for the non-disclosure of confidential information – Rule 5 (7)(a)

16. Contd; The negotiations on the interconnection agreement shall commence NOT LATER THAN 7 WORKING DAYS after receipt of the access seeker's request, unless the parties mutually agree to a later date - Rule 5 (8) On reaching an agreement at the negotiations the conditions agreed upon may be approved by the Commission WITHIN 15 WORKING DAYS - Rule 5(9) such agreement shall not come in to effect until a Certificate of Conformity, is issued by the Commission - Rule 5(11)

17. Contd; Each operator shall provide a copy of such agreement to the Commission WITHIN 5 WORKING DAYS of the execution of the agreement - Rule 5(12) The A/ P shall agree to provide an interconnection service at any technically feasible point in his network, WITHIN 15 WORKING DAYS of the Access Seeker’s request - Rule 8(1)

18. Bank Guarantee An Access Provider as a condition to providing interconnection services shall require an Access Seeker to provide security by way of a bank guarantee for payment of interconnection charges - Rule 7(1)

19. Strict Regulations - Key to Competitive Market Major Operators tend to create market barriers to new entrants In order to minimize creating market barriers TRCSL has incorporated a mechanism to intervene when parties fail to come t an agreement. It is mandatory for TRCSL to resolve disputes between Operators. In built dispute resolution by TRCSL has prevented Operators from seeking remedies from the Court at the first instance.

20. In terms of the Rules - The Commission should be informed if; The Access Provider fails to comply with Rule 5 (5) within the stipulated period - by the Access Seeker - Rule 5(6) If the parties to a non-disclosure agreement cannot agree on the terms therein - by either party - Rule 5(7)(d) If an interim or final agreement is not submitted to the Commission - by Access Seeker - Rule 5(14)(a) There is no signing of a non-disclosure agreement under 5(7)(a) - by Access Seeker - Rule 5 (14)(a)

21. Contd ; If the parties to an agreement intend suspending or terminating the agreement. Rule 5(15)(b) There is a dispute between the operators to an interconnection agreement - Rule 5(16) The Access Seeker and Access Provider cannot agree on the quantum of the Bank Guarantee - Rule 7(2) Where the Access Seeker refuses to accept the alternate proposal put forward by the Access Provider to establish an alternate POI - Rule 8(2)(iv) Where the Access Provider fails to provide access at his exchange building to establish POI to an Access Seeker WITHIN 10 WORKING DAYS of the receipt of the Access Seeker’s request - Rule 17(1)(b)

22. Commission to issue determination if ; The parties to a non-disclosure agreement cannot agree on the terms therein - Rule 5(7)(d) The Commission is informed that there is no interim or final agreement - Rule 5(14)(b) The Commission is informed that the Access Provider has not responded to the A./S request within 5 days - Rule 5(14)(b) The Access Seeker and Access Provider cannot agree on the quantum of the Bank Guarantee - Rule 7(2)

23. Contd; A communication is received from the Access Seeker that he is refusing acceptance of an alternate proposal put forward the Access Provider to establish an alternate POI - Rule 8(2)(v). Where an Access Seeker informs the the Commission that the Access Provider has failed to provide access at his exchange building to establish POI - Rule 17 (1)(c)

24. Stipulated time periods Access Provider to respond in accordance with Rule 5 (5) WITHIN 5 WORKING DAYS - Rule 5(5) Parties to a non-disclosure agreement to agree on the terms therein WITHIN 5 WORKING DAYS - Rule 5(7)(d) Negotiations on the Interconnection Agreement to commence NOT LATER THAN 7 WORKING DAYS after Access Seeker’s request. (unless otherwise agreed by the parties) - Rule 5(8) The conditions agreed upon at the negotiations to be approved by the Commission WITHIN 15 WORKING DAYS - Rule 5(9) TIP Develop transitions or bridges between key points.

25. Contd; The Access Seeker shall WITHIN 14 WORKING DAYS of the receipt of the Access Provider written refusal for interconnection at a technically feasible point and the alternate proposal therefor, communicate his decision of acceptance or refusal - Rule 8(2)(3)

26. Amendments to an Interconnection Agreement Rule 5 (15) (a) No amendment to an interconnection agreement be made without the prior approval of the Commission. Such agreement may be amended in consultation with the Commission by the operators who are parties to such agreement.

27. Suspension/Termination of Interconnection Agreement Rule 5 (15) (b) No suspension or termination of an Interconnection Agreement shall take effect without the approval of the Commission. The Suspension or termination of such agreement shall be by mutual consent of the parties to such agreement or at the request of one operator who is a party to such agreement. The Operators who are parties to such agreement who intend to suspend or terminate the agreement or the operator who request such suspension or termination shall inform the commission of such suspension or termination.

28. Dispute Resolution Rule 5 (16) Any dispute arising between the connectable operators to an interconnection agreement shall be referred to the commission, by one party with notice to the other party for its determination.

29. Quality of Service and Co-location of Equipment Rule 12(1) Operators are obliged to maintain quality of service and to provide reports pertain to TRCSL once in every six months. Rule 17 Access providers are obliged to share the facilities at their own exchange buildings with access seekers subject to a reasonable cost for the services for operation and establishment of POI or POP’s.

30. Conclusion What needs to be done; Imposition of more effective & stringent regulations (for a short period) to develop a market-based industry to foster more competition in the market. Effective & stringent regulations should be in place until the market forces become operational in deciding interconnection charges and Sri Lanka is yet to experience the same. Monitoring of the market forces by the Regulator in order to maintain a competitive market

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