Types of Licensing Regimes
In general, there are three approaches to authorising telecommunications operators and services:
- Individual operator licences;
- General authorisation
- No licensing requirements (i.e., open entry)
These three categories are reflected in the regulatory framework of a number of countries. The categories are used in the EU's 1997 Licensing Directive. While the existing legal framework in all countries does not reflect this categorization, it is a useful approach for considering licensing requirement. (Once again, the North American situation is different. There have generally been no licensing requirements for telecommunications operators or services, except for spectrum licences, FCC Section 214 facilities certification, CRTC international services licences, and historically, public conveniences and necessity certificates in some states and provinces).
Box 2-3:
EU Rules on Condition for General Authorization
| 1. Any conditions which are attached to authorisation must be subject to the principle of proportionality and consistent with the EU's competition rules |
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2. Conditions which may be attached to all authorisations:
- Conditions aimed at ensuring compliance with relevant essential requirements
- The provision of information reasonably required for the verification of compliance with applicable conditions and for statistical purposes.
- Conditions intended to prevent anti-competitive behaviour in telecommunications markets, including measures to ensure that tariffs are non-discriminatory and do not distort competition.
- Conditions relating to the effective and efficient use f numbering capacity.
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3. Specific conditions which may be attached to general authorisations for the provision of publicly available telecommunications services and networks:
- Conditions related to protection of users and consumers, in particular, in relation to:
- The prior approval by the national regulatory authority of the standard subscriber contract
- The provision of detailed and accurate billing
- The provision of procedure for the settlement of disputes
- Publication and adequate notice of any change in the access conditions, including tariffs, quality and the availability of services
- Financial contribution to the provision of universal services, in accordance with Community law.
- communication of customer database information is necessary for the provision of universal directory information.
- Provision of emergency services.
- Special arrangements for disabled people.
- Conditions relating to interconnection of networks and the interoperability of services, in accordance with the EU Interconnection Directive and obligations under Community law.
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| Source: CEC (1997) |
The form of the licence depends on the legal regime of each country. Matters of form are largely irrelevant to good licensing practice. What is more important is that licence conditions are clear, proportionate and enforceable.
In many countries, the grant of telecommunication licence is a unilateral act of the regulatory authority. The licence is granted to one or more licensees subject to the terms and conditions specified in the licence. The grant of the licence is purely administrative act.
In other countries, a licence is a contract between the regulator and the operator. This approach is used where licences are granted by the way of traditional "concessions". Licences in this form generally set out rights and obligations of both the regulator and the operator in some detail and are signed by both parties. This "contractual" form of licence is most common and useful in countries where the legal and regulatory framework is less developed.
Box 2-4:
EU Rules on Conditions for Individual Licensing
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Specific conditions which may be attached to individual licences, include:
- Specific conditions linked to the allocation of numbering rights (compliance with national numbering scheme)
- Specific conditions linked to the effective use and efficient management of radio frequencies
- Specific environmental and specific town and country requirements, including conditions linked to the granting of access to public or private land and conditions linked to collocation and facility sharing.
- Maximum duration, which shall not be unreasonably short in particularly in order to ensure the efficient use of radio frequencies or number or to grant access to the public or private land, without prejudice to other provisions concerning the withdrawal or the suspension of licences.
- Universal service obligations
- Conditions applied to operators having significant market power, intended to guarantee interconnection or to control of such significant market power.
- Conditions concerning ownership which comply with European Community law and the community's commitment vis-à-vis third countries.
- Requirements relating to the quality, availability and permanence of the service or network.
- Specific conditions relating to provision of leased lines.
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| Source: CEC (1997) |
Over time the need for individual licences will diminish in many liberalised markets. In a highly competitive market the main justification for individual licences will be the need to fairly allocate scarce resources such as spectrum. This is one reason to separate the licensing of spectrum from the other aspects of licensing.
Whatever the legal form of process of licensing, good licensing regimes have common features. These include clarity, transparency and avoidance of unnecessary burdensome conditions. These features are discussed further in Licensing Practices later in the text.
Table 2-1:
Types of Licensing Regimes
| Type |
Main Features |
Examples |
| Individual Licences |
Usually a customized and detailed licence |
Basic PSTN services in a monopoly market |
| Operator Specific License |
Frequently granted through some form of competitive selection process
Useful where:
a scarce resource or right is to be licensed (e.g. spectrum)
the regulator has a significant interest in ensuring that the service is provided in particular manner (e.g. where the operator has significant market power)
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Mobile and fixed wireless service.Any service requiring spectrum
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General Authorisation
(class licences) |
Useful where individual licences are not justified, but where there are significant regulatory objectives which can be achieved by establishing general conditions.
Normally contain provision relating to consumer protection and other essential requirements.
Generally issued without competitive selection process; all qualified entities are authorized to provide services or operate facilities |
Data transmission services
Resale services
Private networks |
| Services which may be provided without a licence. (Fully liberalised services.) |
No licensing process or qualification requirements.
Useful when an activity is technically caught within the definition of activities subject to regulations (e.g. offering a telecommunications service to the public) but where there is justification for imposing licence requirements.
Internet service provider (ISP) |
Value-added services |
Table 2-2:
Licensing Directive: Types of Regulation of Competitive PSTN Operator
| Allocation of Spectrum |
Individual spectrum licence issued through competitive selection |
| Essential Requirements |
General operating authorization or class licence available to all qualified operator |
| Anti-competitive Practice and Universal Service |
General law and regulations applicable to all operators in the sector. |
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