1. Harmonized Policies, Legislation and Regulations in the OECS Presented by: Apollo Knights Director of Telecommunications - NTRC St. Vincent and the Grenadines

2. O.E.C.S. Member States Antigua & Barbuda Dominica Grenada Montserrat St Kitts and Nevis St. Lucia St Vincent and the Grenadines. Anguilla and the British Virgin Islands are associate members. The OECS is a nine member grouping comprising of:

3. Structure of the O.E.C.S. The OECS is administered by a Central Secretariat located in St Lucia. The Islands share a single currency, the Eastern Caribbean Dollar ($2.70 ECD = 1 USD). The operation of the currency is overseen by the Eastern Caribbean Central Bank. The Islands also share a common Court system More info about the O.E.C.S is available at www.oecs.org

4. Statistics CountrySize (sq km) PopulationGDP per capita 19982006 St. Lucia616170,649$5,408$7,499 St. Vincent & Grenadines389118,149$4,860$7,007 Grenada34489,971$6,038$8,536 Dominica75472,386$5,366$6,996 Antigua & Barbuda44369,481$9,467$14,251 St. Kitts26139,349$10,958$14,486 British V.I.15323,552---$38,500* Anguilla10213,677---$8,800* Montserrat1029,538---$3,400* Source: United Nations of World Information * 2004 Estimates

5. Can Harmonisation of the Regulatory Framework among independent states facilitate increased connectivity? In 1998, the OECS launched the “OECS Telecommunications Reform Project”. The broad objective was to reform the telecommunications sector in five OECS countries that agreed to be part of the project: Grenada, St. Vincent, St. Lucia, Dominica and St. Kitts & Nevis. At that time, the telecom sectors of the five countries were typified by the following characteristics: i. Outdated laws, licenses and agreements. ii. These laws, licences and agreements were highly restrictive.

6. iii. Exclusive provision of all main services, such as fixed line and cellular. iv. Tariffs, which were not based on costs and were not balanced. By 1999, the member Governments of the project decided that they were ready to move from their current positions to a situation which was in line with developments worldwide, i.e. liberalisation, for overall economic, social and cultural benefits.

7. From this point of a common policy, everything else followed in a logical fashion: 1. A Treaty was established to put the legislative mechanisms in place to allow a harmonized approach to regulating the telecom sector. 2. Harmonized telecommunications Acts were developed and passed in all of the five countries during the period 2000-2001. 3. Another important phase that had to be accomplished was the ending of the exclusive telecom licences held by C&W on terms that were agreeable by all parties.

8. 4. This MOU was followed by a formal agreement between all parties on the 20 May, 2002 that enabled the full liberalization of the Telecommunications sector to proceed in the sub region by April 1, 2002. 5. Various sets of harmonised regulations in key regulatory areas were enacted in the period 2002-2003 under the Telecom Act in each member state, to further strengthen and clarify the regulatory framework

9. One regulation of specific importance was Dispute Resolution, which was not completed and enacted until 2007. This is an important point that will be addressed later. 6. The first licences to be granted to new entrants under the new telecom acts were private networks and ISPs. This brought about the first form of competition whereby the cable TV providers in SVG and Dominica started offering Internet Access. 7. International connectivity was done via VSAT, which limited access speeds.

10. 8. Competition also came from the existing cable TV operator in Dominica, which not only offered internet access, but also brought competition in the fixed voice market using the existing cable network. This local company was the first to establish an interconnection agreement with the incumbent in July 2002. 9. Later in 2002, mobile and other licences were granted to applicants throughout the five countries. Digicel and AT&T were the first companies to construct mobile networks, with Digicel being the first to launch service after coming to a 5 year interconnection agreement in March 2003. 10. The agreement took a long time, and led to litigation between the regulator and incumbent in one of the member states.

11. 11. Among the main provisions of the legislative framework was the harmonized approach to regulating the sector: There now exists: i. Standardized forms for licence applications in all five countries; ii. Standardized licences with similar terms and conditions; iii. Harmonized regulatory fees for licences and spectrum. iv. A regulatory system that is funded directly from regulatory fees collected as compared to annual contributions from member Governments. v. A regional agency (ECTEL) to allow the pooling of scarce human resource in specific regulatory areas, thereby reducing the cost of regulating the sector as compared to having full fledged regulatory bodies in each country.

12. 12. The May 2002 agreement required that a PCP plan be implemented within a certain timeframe. This was not done, and led to litigation between both parties. 13. A PCP was finally implemented in Dec 2004 for C&W in all 5 countries. 14. A regional spectrum plan was formally implemented by ECTEL. 15. A regional numbering plan was implemented by ECTEL in 2006 followed by national numbering plans by the NTRCs in each member state.

13. We are now at a position where five years have passed since large scale competition has entered the market in the five OECS countries, and 10 years since the reform process started. This is an ideal time to review what was occurred in the sector and assess the success and/or effectiveness of each. Penetration of fixed, mobile and Internet services over last 5 years. Telecom sector Investment. Sources: ECTEL/NTRC/Operators

14. Source: ECTEL/NTRC/Operators Fixed Line Subscribers:Mobile Subscribers: The following graphs show Fixed Line and Mobile Subscribers over the past 5 years.

15. Fixed Line Rates: EC ($)March 03 March 04March 05March 06March 07 Range of Monthly Rental 17-5420.40-26.40 Local fixed to Fixed (peak) 0.09 0.07 Local Fixed to Mobile (peak) 0.81 0.760.71 Source: ECTEL/NTRC/Operators

16. From the graphs, the biggest impact was on mobile penetration. Mobile phones are not a secondary means of communication, but actually the preferred form of communication for the greater part of the population in most of the states. However, the cost of usage for this new sector of the population is consistently higher than the fixed line market, despite there being fiercer competition in the mobile market. Essentially, the cost of domestic communication per minute is higher for the majority of telecom customers since competition has arrived. Type of CallRate 3 min Fixed to Fixed$0.21 Mobile to Mobile (On Network) $1.62 C&W $2.25 Digi Mobile to Mobile (Off Network) $2.55 C&W $2.55 Digi Mobile to Fixed$2.55 Fixed to Mobile$2.13 -What is the real cost of originating or terminating a mobile call, and are the current rates inline with these costs? -Do we have a competitive mobile market with two players? Source: NTRC/Operators

17. Fixed line penetration has shown a slight decrease over the period, which has been attributed to some customers giving up their home phones for mobiles. International rates to the USA from SVG One of the first noticeable impacts of competition in the sector is the initial drop in international rates, which has now stabilized. Source: NTRC/Operators

18. Internet Statistics: An important statistic that needs to be analysed over the period is that of Internet subscribers. In order to reap the full potential of a connected society and achieve some of the goals as outlined in the 1999 regional policy, our consumers need to be connected via data connections. The region has benefited from the liberalization of the sector from being connected via the voice medium but has not done as well with data. Why has the growth of internet subscribers been so small over the period? Source: ECTEL/NTRC/Operators

19. Challenges to Broadband penetration 1.Noting the relative small sizes of the five countries, our situations may differ in a number of areas when compared to other developing countries. 2. It is generally agreed that a mobile network is more easily established than a fixed network, and it was no surprise that mobile networks were the first to be deployed. 3. Competition came into the mobile market which led directly to overall increased penetration levels of the incumbent and one of the new entrants (Digicel)

20. 4. Although it was evident that internet access was important to all sectors, competition in this area was still very limited. The data speeds available on the 2-2.5 G mobile networks were not a viable option for internet access; the only option that would be able to provide efficient service in this area would be through fixed networks. 5. Although a satellite solution was available, it was not practical to effectively compete with the incumbent. 6.While the computer is the main obstacle we also need to work on the rates in parallel.

21. Entry Level Internet rates over the past 4 years: “Entry Level” refers to the minimum speed offered by the provider for a given year. Speed Monthly Rate 200564kbps$79 2006256kbps$99 2007512kbps$79 20081Mbps$79 Source: NTRC/Operator

22. Store 1Store 2Store 3Store 4Store 5 19” Flat Panel 1GB RAM 160GB* Hard Drive Dual Core 2.2GHz DVD-RW 10/100Mbps NIC $2,999$2,900$3,000$3,199$2,375 Current Computer Prices in St. Vincent and the Grenadines: Source: NTRC/Retailers Notes: Store 4 has a 320GB Hard Drive Store 5 has a 250GB Hard Drive Stores 1 to 4 are all branded computers (Dell, HP) Store 5 is a clone (a mix of various manufacturers’ parts)

23. 8. Over the past few years, the relevant policy decisions were made to try to have some regulatory interventions to spur growth and not rely solely on providers to facilitate the growth that is needed. Our telecom legislation required the establishment of USFs in each member state managed by the regulator. 9. Presently, draft USF regulations have been developed with input from all stakeholders, especially the providers. Regulations are now with member states for enactment, with St. Lucia already enacting their regulations.

24. What could have been done differently? There are matters that could have been dealt with differently: 1.Certain regulatory instruments should have been implemented prior to liberalizing the sector, such as (1) dispute resolution regulations, and (2) costing studies. Practical regulatory mechanisms should be the only means of achieving the relevant objectives. 2.In moving from a monopoly environment, it must be recognized that disputes would arise between new entrants and the incumbent and that the relevant regulatory provisions should be in place to allow for these to be resolved in a systematic and transparent manner instead of a lengthy court system as the only option.

25. 3.Having access to costing studies specific to the region would have been helpful during the approval process of the interconnection agreements. 4. A lot of time and resources from the regulator and the incumbent were spent to implement the PCP, but at this time, it is not certain if the implemented PCP is serving its regulatory purpose. 5. It is believed that liberalization followed by competition would still have occurred in our member states without there being a harmonised regulatory framework in place, which has already occurred in most other Caribbean countries since. However, it is doubtful that it would have came at the same time and in all of the countries simultaneously as was done

26. 6. The harmonised framework has allowed for us to have a regulatory framework that costs less to operate as compared to if all five states had established stand alone regulatory bodies, which is especially important noting the sizes of the countries in question. 7.Apart from the savings in direct regulatory fees, the providers can save on the administrative cost associated with their regulatory responsibilities.

27. The CTU has been working on establishing a harmonised spectrum policy and plan for the Caribbean region since 2006, which was one of the first tasks dealt with in the OECS. The member states have been deeply involved with the CTU task force. We are part of the CTU task force on the matter and were able to contribute our experiences with a harmonised scheme involving five countries. The CTU is now attempting a similar approach, this time using around 14 Caribbean countries. This is not an easy task, and we have been able to share our experiences, as well as receiving new ideas to improve our current system. We are already putting the advice and ideas to use by incorporating them in our revised legislation that is currently been worked on.

28. Here is a good example of how a harmonized spectrum plan directly affects providers and consumers: When spectrum plans are not harmonized, it leads to the same service being allocated to different bands in different countries, which is the reason that dualband, triband and quad band mobile phones exist. The more bands, the more expensive the phone. Dual BandTri-BandQuad-Band Cable and Wireless$99$199$580 Digicel$149$209$649 Below are costs for different band phones in one OECS state.

29. Can Harmonisation of the Regulatory Framework among small independent states facilitate increased connectivity? From what I have outlined I believe it is fair to outline that harmonization will likely lead to reduced regulatory cost and resources which will directly benefit regulators and providers. The OECS region seems to be at the right point to partner with all stakeholders in an effort to facilitate notable growth in broadband penetration and the ICT sector on a whole.

30. In the end our (regulators, stakeholders, providers, vendors) objective is the same; getting our citizens all connected. It is just a matter of working together and trying to strike a balance on what should be done, how it could be done and when.