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The Hashemite Kingdom of Jordan

Telecommunications Regulatory Commission

Consultation Regarding Licensing the Use of 3G Cellular Communications Technologies Radio Frequencies in Jordan

Amman 25 June 2008

Deadline for receipt of Comments:12:00 noon on 25 Aug 2008

Telecommunications Regulatory Commission P.O. Box 850967 Amman 11185 Jordan

Licensing the use of 3G Cellular Communications Technologies Radio

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Consultation Regarding Licensing the Use of 3G Cellular Communications Technologies Radio Frequencies

Table of Contents

Foreword ii

Chapter 1 Executive Summary 1

Chapter 2 Introduction 3 2.1 Background 3 2.2 Objective of this Consultation 4 2.3 Developments in Spectrum Availability and Usage 5

Chapter 3 Spectrum Allocation and Band Configuration 7 3.1 ITU Spectrum Allocation Recommendations 7 3.2 Proposed Band Plan for 3G Spectrum in Jordan 8 3.3 Anticipated 3G Spectrum Requirements per 3G operator 9 3.4 Anticipated 2G Spectrum Requirement per 3G Operator 9

Chapter 4 3G Standards 11 4.1 General 11 4.2 Introducing a 3G Standard into Jordan 11

Chapter 5 Policy Considerations 14 5.1 Who is Eligible to apply for a 3G Mobile Spectrum Licensing in Jordan? 14 5.2 No need to intervene for ensuring one or more 3G Spectrum Licence for incumbent operators; 16

Chapter 6 Regulatory Considerations 18 6.1 Assignment Mechanism 18 6.2 Factors to be taken into account in designing the proposed Auction 20

Chapter 7 Numbering Requirements & Addressing 26 7.1 Numbering Requirements 26 7.2 IP Addressing arrangements for 3G Services 26 7.3 3G Services in the 2G Spectrum 26



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Foreword This consultation marks a significant step in introducing further choice and diversity into the Jordanian mobile communications sector and thus in creating the conditions for effective competition in that sector. Third generation (3G) mobile represents a major evolution in mobile communications, bringing the full power of the Internet, with high quality audio, video and graphics, to people on the move. Data rates up to 200 times those of existing mobile phones will enable large files to be transmitted almost instantaneously and new applications like electronic postcards and mobile video conferencing to become commonplace. This document describes the TRC’s preferred approach to authorising the use of radio frequencies in the 2.1Ghz band to provide 3G services in a manner that fully complies with the Statement of Government Policy, 2007 on the Information and Communications Technology & Postal Sectors. Authorising the use of such frequencies will maximise the benefits to the consumers in Jordan. This document seeks input from all interested parties on, in particular, the following matters:

• The amount of spectrum required in order to provide 3G services; • The use of 3G Standards; and • Options for the competitive award of the 3G spectrum licences.

Whilst this consultation document contains specific questions related to the above matters, respondents may express their views regarding other related issues that are considered of major importance to the 3G licensing process. TRC looks forward to receiving the submissions of all interested parties to help us refine our proposals and secure the successful grant of 3G spectrum licences in a timely manner.



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Chapter 1 Executive Summary This document “Consultation regarding licensing the use of 3G Communications Technologies Radio Frequencies in Jordan” addresses a number of policy, as well as technical, commercial, economic and regulatory issues relating to the introduction of 3rd generation (3G) mobile services in the Hashemite Kingdom of Jordan. Third generation mobile technologies (3G) represents the next major step in the evolution of mobile communications, with an emphasis on data rather than on voice services. This reflects similar trends at the international level in fixed telecommunications, where the rise of the Internet has seen data overtake voice traffic. The positioning of 3G in the wider telecommunications sector in Jordan can best be encapsulated in terms of bandwidth and mobility capability, as follows:

• Current 2G (GSM & iDEN) mobile networks are capable of providing high mobility, narrow-band services;

• Current fixed networks are capable of providing low mobility, wide-band services;

• 3G mobile networks will be able to provide high mobility, wide-band services.

TRC believes that the grant of General Radio Spectrum Licences for Radiocommunication Systems related to the Integrated Licensing Regime which authorise the use of radio frequencies in the 2GHz band, (hereinafter “3G spectrum licences”) is an important step towards achieving the policy objectives of creating the conditions for effective competition in the mobile sub-sector by creating market entry possibilities. TRC is cognisant that; the incumbent mobile operators may have an advantage over new entrants in so far as the incumbents benefit from the existing operations and installed infrastructure, and ultimately they are well positioned to achieve the policy objective calling for the rapid introduction of new services. However, in awarding the 3G spectrum licences in Jordan, TRC is seeking, in line with its mandate under the Telecommunications Law and in compliance with the ICT Sector Policy 2007, to create new market entry possibilities and reduce barriers to entry and thus maximise competition in the mobile sub-sector. Government Policy requires TRC to examine whether it is desirable to make spectrum capacity available for advanced mobile networks including 3G and 4G. At this time TRC is focussing on the introduction of 3G technologies only and will defer the introduction of other advanced mobile communication technologies such as 4G and WiMax to a later date and after further study. Accordingly, and in support of those policy objectives, TRC intends to offer the 3G spectrum licences in accordance with the following principles:



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• Any qualified person including the incumbent operators and new entrants, shall be able to apply, on a transparent and equal basis without favouritism, to gain one of the offered 3G spectrum licences,

• No 3G spectrum licences will be reserved for any new entrant or any incumbent operator.

TRC anticipates that the demand for 3G spectrum (radio frequencies in the 2.1GHz band) is likely to exceed the available supply. Thus, TRC requires a transparent and objective mechanism for determining who will be authorised to use the 3G spectrum in Jordan. To that end, TRC envisages granting the 3G spectrum licences by a competitive process. This document sets out TRC’s views on the design of the competitive process for the award of the 3G spectrum licences in Jordan. It must be stressed that before making any final regulatory decision in this regard, TRC seeks the views and input of all interested parties on the grant of 3G spectrum licences in Jordan. All responses to this call for comments will be given due consideration by TRC in its decision making process.



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Chapter 2 Introduction

2.1 Background In September 2003, the Government of the Hashemite Kingdom of Jordan published its first statement of Government Policy 2003 on the information and communications technology and postal sectors. In that statement, the Government decided to cease the duopoly (in the mobile sub-sector) based on several factors, which include inter alia:

• Paragraph (25) provides: “In line with wider government policy, Government requires that further competition be from the private sector. In accordance with WTO and other international commitments, no unjustifiable impediment must be imposed upon potential entrants to the market, including those relating to nationality of ownership, flows of capital and similar matters.”

• Paragraph (26) provides: “Government requires that necessary scarce resources, for

the further development of capacity and the enhancement or introduction of services by market entrants and established operators, be made available in a manner that is consistent with the explicit programme for further licensing. The resources, including radio spectrum in all frequency bands relevant to mobile telecommunications services, must be provided at pricing that is economically efficient, in relation to scarcity, and, in accordance with undertakings associated with WTO membership”

Pursuant to the above mentioned policy statement, TRC published, in November 2003, a “Program for Further Licensing within the Mobile Telecommunications”. Paragraph (3.6) of that program expressed the TRC’s future intent:

• To offer additional spectrum for mobile telecommunications in the IMT 2000 – 2GHz band, and

• That the fees for such spectrum will be determined based on the TRC’s tariff schedule

and an additional fee based on an estimate of the value of such spectrum as determined based on internationally accepted valuation methods and an evacuation fee to be determined by the Jordanian Military.

In May 2007, the Government of the Hashemite Kingdom of Jordan published its updated statement of Government Policy 2007 on the information and communications technology and postal sectors (hereinafter “the Statement of Government Policy 2007”). The Government’s decision to update the sector policy is based on several factors, which according to the Government Policy include inter alia:

• The Government finds that the revised policy statement should focus on creating the necessary conditions whereby both the fixed and mobile sub-sectors become fully competitive; and

• The demand for and utilization of a variety of wireless communications services means

that radio-frequency spectrum, a national resource, will be in ever-increasing demand. This requires a comprehensive system and plan for its effective utilization as a critical part of the Kingdom’s economy;

The Statement of Government Policy 2007 provides:

• “..the Government requires the TRC to take all such steps as may be necessary in order to facilitate the rapid entry of new competitors into the ICT sector and the rapid



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introduction of new services by those entities, as well as by any existing Licensee” [Paragraph 43].

• “...the steps necessary to create the conditions for effective competition include but are

not limited to: • …. • reducing the barriers to market entry • creating new market entry possibilities • ….” [Paragraph 44].

• “Government requires that the management of the radio frequency spectrum be under

the TRC’s control and that unused non-civilian spectrum be identified and transferred to TRC management as soon as possible. The TRC should identify likely required spectrum bands and negotiate their release well ahead of market demands.” [Paragraph 50].

• “The Government recognizes that the entry of additional providers in the mobile market

would stimulate further decreases in prices and an increase in mobile penetration. Accordingly the Government requires the TRC to take actions to promote the entry of additional mobile providers… . The TRC shall also examine whether it is desirable to make spectrum capacity available for advanced mobile networks including, but not limited to, third or fourth generation networks (3G/4G), whether for new or existing licensees. This includes the consideration of promoting the utilization of existing 2G frequency bands for more advanced and efficient services.” [Paragraph 55].

• “Market entry of facilities-based operators have provided Jordan with a rich set of

physical networks, both fixed and mobile. The decision whether further facilities-based operators should be introduced should be left to the market and the current open licensing regime.” [Paragraph 55].

2.2 Objective of this Consultation This document seeks input from all interested parties on, in particular, the following matters:

• The amount of spectrum required in order to provide 3G services; • The use of 3G Standards; and • Options for the competitive award of the 3G spectrum licences.

Whilst this consultation document contains specific questions related to the above matters, respondents may express their views regarding other related issues that are considered of major importance to the 3G licensing process. In compliance with its mandate to act transparently and objectively as part of a process in creating the conditions for effective competition in the mobile sector in Jordan, TRC is now seeking the views and input of all interested parties on the grant of 3G spectrum licences in Jordan.



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2.3 Developments in Spectrum Availability and Usage For Technical and practical reasons, it has been historically known at the global level that the radio spectrum bands below the 10 GHz are preferred by operators as well as the manufacturers of radio equipment, and for both the civil and the military communication purposes. This preference is growing with the technology developments and the exponential growth of demand for broadband fixed and mobile telecommunication services. A similar situation is prevailing in Jordan. During the past few years, before and after TRC assumed its mandate under the Telecommunications Law 1995, the major spectrum licensing processes was related to the licensing of the public mobile wireless services . On each of those occasions, the right to use the related spectrum was contingent upon reaching an agreement between the licensee and the Armed Forces for the evacuation of the required bandwidth. Furthermore, the effectiveness of the licence agreements was also contingent upon agreeing the terms and the amounts of money for compensating the evacuating party. After liberalizing the fixed telecommunications sub-sector in early 2005, and opening the doors for new entrants to that sub-sector, a pressing demand for large amounts of radio spectrum in the bands below 6 GHz started to emerge. Having in mind the positive impact of using the radio spectrum in the mobile and fixed telecommunication sub-sectors on the national economy, His Majesty King Abdullah extended his support to the Ministry of Information and Communications Technology (MoICT), the Armed Forces and TRC to make available radio spectrum for commercial services in both the fixed and mobile telecommunication sub-sectors. As an outcome of that initiative, limited spectrum in the (3.5, 3.6 & 5.4 GHz) bands was made available for the purposes of providing Fixed Broadband Wireless Access (FBWA) services and because the demand for such spectrum exceeded the available supply, TRC decided to grant those licences through a competitive process (spectrum auctions) which is the most commonly used method in such situations around the world. Following the approval of the Council of Ministers, in accordance with Article (32) of the Telecommunications Law, TRC prepared and published in September 2006 a comprehensive statement1 (Arabic Language) setting out the procedures for the spectrum auctions. Having in mind that the new generation mobile services (3G/UMTS, 4G) are broadband in nature and require greater amounts of radio spectrum than the second generation services (2G, 2.5G, 2.75G), and building on the success of the new initiative of making radio spectrum available in advance of the licensing process for FBWA services in Jordan, TRC has sought to secure the availability of 3G spectrum. To achieve that objective, MoICT and TRC, with the extended support from H.M. the King, resumed negotiations with the Armed Forces for making available as much as possible of the radio spectrum that is allocated by the ITU for 3G services and widely

1 http://www.trc.gov.jo/images/stories/pdf/FBWA%20Statement.pdf?lang=english



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used at the international level. These negotiations are based on an undertaking by TRC that the Armed Forces be compensated for the costs related to evacuation, and the agreement so far is to evacuate 2 x 45 MHz paired blocks of spectrum for FDD (Frequency Division Duplex) and 4 x 5 MHz un-paired blocks of spectrum for TDD (Time Division Duplex) in the 2 GHz band.



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Chapter 3 Spectrum Allocation and Band Configuration

3.1 ITU Spectrum Allocation Recommendations According to the International Telecommunication Union (ITU) frequency allocations, the frequency band 1885-2200MHz is allocated for Fixed and Mobile Services on a primary basis. However, it does not preclude an individual administration making its own decisions on frequency allocation based on national requirements and circumstances. In 1992, the World Administrative Radio Conference (WARC-92) identified the frequency bands 1885-2025MHz and 2110-2200MHz as being intended for use on a worldwide basis by administrations wishing to implement IMT-2000 services. The models adopted by various regions around the world for 3G applications are depicted below:

1850 1900 1950 2000 2050 2100 2150 2200 2250

IMT 2000ITU Allocations

1885 1980 2025

MSS IMT 2000

2110

MSS

2170

UMTS MSSEurope GSM 1800

1880

UMTS MSS

3G Spectrum Allocation-International



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3.2 Proposed Band Plan for 3G Spectrum in Jordan Most of the 2 GHz band is currently used by the Armed Forces in Jordan. TRC and the MoICT has formed a preliminary agreement with the Armed Forces to evacuate parts of the frequency bands 1885-2025MHz and 2110-2200MHz. This agreement identified the following spectrum slots for immediate evacuation:

• (2 x 45 MHz): 1920-1965 MHz paired with 2110-2155 MHz for the Frequency Division Duplex (FDD) mode, and

• (20 MHz): 1900-1920MHz for Time Division Duplex (TDD) mode. Recent international experience indicates that the demand for using the TDD mode is very low when compared with the demand for using the FDD mode, and TRC is of the view of not imposing combined spectrum packages containing both of the FDD and the TDD systems. The available bands for allocation to 3G applications are depicted below:

1900

1950

2000

2050

2100

2140

2170

1935

1980

2110

2025

1920

1965

2155

3G Spectrum

3G –

TDD

3G - FDD 3G - FDD

A B C D D’C’B’A’

2125

2010

Futu

re T

DD

Futu

re F

DD

Futu

re F

DD

Each band can be divided into blocks of 5MHz bandwidth for assignment purposes. In total there are 9 blocks of 5MHz paired FDD and 4 blocks of unpaired TDD available for allocation in Jordan as follows: Frequency Range (MHz)

Bandwidth Available (MHZ)

Application Bandwidth Per Block (MHz)

Total No. of Blocks available for Allocation

1900-1920* 20 TDD 5 4

(1920-1965) paired with (2110-2155)

(2 x 45) FDD (Paired) 5 2 x 9

* For allocation if the market expressed demand for TDD operations.



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3.3 Anticipated 3G Spectrum Requirements per 3G operator Work carried out by the UMTS Forum recommended that a minimum spectrum allocation of 2 x 15 MHz paired (FDD) and 5 MHz unpaired (TDD) would be required to provide a full range of 3G services in the initial phase. Numerous countries around the world have proposed to assign a combination of paired and unpaired blocks. In many cases only the paired FDD portion of the spectrum was assigned. Some countries have also chosen to offer smaller spectrum packages on the basis that these would be sufficient for an existing operator with access to 2G spectrum. The TRC believes that while some applicants may require (2 x15 –to- 2 x20 MHz) of FDD spectrum plus an optional (5 MHz) of the TDD spectrum, others may look for a smaller amount such as (2 x 10 MHz) paired (FDD) to provide the full range of 3G services in Jordan. As the services mature, it is likely that more spectrum will be required by operators in the future to deliver the capacity and data rates demanded by users. Accordingly, in this consultation document, TRC takes the view that the 3G spectrum at this stage should be packaged in a way that meets variable demand levels of the potential applicants. Thus, TRC proposes to package spectrum in “n” blocks of 2 x 5MHz spectrum in the FDD band {n x (2 x 5 MHz)} where n is an integer and indicates the number of paired (5 MHz) blocks.

3.4 Anticipated 2G Spectrum Requirement per 3G Operator TRC has recently received several requests for access to 2G spectrum together with access to 3G spectrum from potential new entrants and from some incumbents who intend to expand the capacities of their existing networks. The new entrants indicated in their requests that securing both 2G and 3G spectrum will be critical to their business cases and their ability to compete with the incumbents who already have authorisation to use 2G spectrum and fully established networks providing a wide range of mobile services (including low speed data services),. TRC fully understands this input from potential new entrants, and has made a preliminary decision to offer access to 2G spectrum in conjunction with the 3G spectrum, and TRC is taking the necessary steps with the Armed Forces to avail up to eight blocks of paired spectrum in the 1800 MHz band; TRC believes that offering some 2G spectrum in the 1800 MHz band in conjunction with the offered 3G spectrum packages best meets the requirements of the market. Accordingly, in this consultation document, TRC sets out its intention to configure the available spectrum in two licence forms;



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Licence A: to meet the demand of the applicants whose requirements include access to both the 3G (2100 MHz) spectrum, and the 2G spectrum in the (1800 MHz band) Licence B: to meet the demand of applicants whose requirements are limited to accessing the 3G spectrum in the (2100 MHz band) only. Question 1:

• Do you agree to the proposal of offering spectrum licenses in two configurations; (i.e. Licence A, composed of 2G (1800 MHz) spectrum plus 3G (2100 MHz) spectrum and Licence B, composed of 3G spectrum only) as set out above?

• If you agree and you have plans to participate in the competitive process for awarding the spectrum licences, please indicate the amount of paired and un-paired spectrum you intend to apply for in either of the two configurations? (Note: this information shall not be binding on the responder to this consultation, but it will be used by TRC for refining the details of the awarding process. TRC urges respondents to specify their spectrum requirements carefully and responsibly. TRC considers individual spectrum requirements to be confidential and as such TRC will not publish this information when the other comments and input to this consultation are published).

• If you do not agree, please state why and suggest alternative and objectively justified configurations



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Chapter 4 3G Standards

4.1 General There are a number of alternative technologies which might be deployed for broadband mobile services, namely:

• The wide range of IMT-2000 family of technologies (3G), • The wide range of technologies based on IEEE standards in the 802. series

(including, for example, 802.16e, which enable fixed broadband services, hot-spot backhaul and mobility, and which are certified as WiMAX products),

• Proprietary technologies. Regarding the 3G standards, various technologies and standards are being developed, and in an effort to harmonise these technologies, the International Telecommunication Union (“ITU”) established a family of standards known as International Mobile Telecommunications 2000 (IMT-2000). 3G technology is intended to revolutionize the capabilities in mobile communications and in particular mobile data. Accordingly, 3G is extending the scope for mobile communications much further than that of 2G. The IMT-2000 (3G) standards provides users with the ability to use broadband to communicate anywhere, at any time, with anyone. The Radiocommunications division of the ITU (ITU-R) approved a comprehensive set of terrestrial radio interface specifications for IMT 2000. These different interfaces have been approved due to the need to meet differing evolution/migration requirements from incumbent 2G systems in individual regions. The approved Radio Interfaces are:

• IMT-2000 CDMA Direct Spread Spectrum, • IMT-2000 CDMA Multi Carrier, • IMT-2000 CDMA TDD (Time Division Duplex), • IMT-2000 CDMA Single Carrier, • IMT-2000 FDMA/TDMA (Frequency Division Multiple Access/ Time Division

Multiple Access). Both CDMA Direct Spread and CDMA TDD are identified as Wideband CDMA or W-CDMA. This technology was designed based on a GSM-MAP (Mobile Application Part) system as the core network. This technology is widely used in most countries around the world. Comprehensive standards and specifications have been prepared by 3GPP (see http://www.3gpp.org), a partnership project comprising various standardization bodies from around the World.

4.2 Introducing a 3G Standard into Jordan At present, three existing public mobile wireless service operators are using GSM technology (with implementation in the GSM 900 and GSM 1800 bands) and one operator is using iDEN trunked technology (with implementation in the 800 MHz band).



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Article (68-f) of the Government policy for the sector 2007, requires TRC to: ‘Investigate and adopt wherever possible, advanced spectrum management principles, including but not limited to: a technology and service neutral approach to spectrum; ..., except where these would be inconsistent with applicable international agreements or would create undesirable effects (e.g. loss of international mobile roaming). The above mentioned policy objective suggests to liberalize the use of frequency bands. This means removing technology and usage restrictions in licences unless they are necessary for the efficient management of the radio spectrum. Some restrictions might be necessary to comply with international obligations or to ensure that neighbouring users do not suffer an unacceptable level of interference. On the other hand, the TRC is interested to promote the adoption of technical standards that are compatible with each other from the users’ point of view in order to facilitate competition between networks and to maximize user convenience in using roaming services without having to change the mobile terminals. The principles that the users should be able to switch networks without having to change the mobile terminals would mean that the TRC would be encouraging the use of one 3G standard, while the adoption of multiple standard in Jordan might result in the requirement for guard bands between the bands used by networks of different 3G standards which would reduce the amount of usable spectrum. TRC expects that the operators would take the requirements of compatibility and efficiency into consideration in their choice of the 3G standards and put forward their chosen standard(s) in their applications for the 3G spectrum. TRC is of the view that W-CDMA standards will offer 3G evolutionary upgrades for the existing (2G-GSM) mobile networks in Jordan. Further, it offers interoperability and a low cost impact in upgrading both the hardware and software of the system. The TRC would prefer to see that the W-CDMA technology as the choice of all applicants for 3G spectrum. However, prospective operators may choose to use other IMT-2000 standards adopted by the ITU within their assigned 3G frequency bands for 3G mobile services, subject however to the TRC being satisfied that:

The various technical standards are compatible with each other from the users’ point of view; and

Interference mitigation techniques will be used to ensure that neighbouring users do not suffer an unacceptable level of interference.



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Question 2: • Do you agree that the IMT-2000 (W-CDMA) standard is preferred for adoption

of 3G broadband mobile services in Jordan? • If not, you are kindly requested to submit arguments regarding the

compatibility of your preferred technology and the TRC preferred W-CDMA technology. Such arguments should focus on ensuring that the users will have sufficient choice of networks and on measures to mitigate interference?



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Chapter 5 Policy Considerations

5.1 Who is Eligible to apply for a 3G Mobile Spectrum Licensing in Jordan? The spectrum that will be offered by TRC for 3G services is part of the 2 GHz band which is part of the core IMT-2000 spectrum identified at WARC-92. In general, to provide 3G mobile services in Jordan, a 3G operator must have the following two types of licences:-

• A General Radio Spectrum Licence constituting the authorisation to use the assigned radio spectrum in the 2GHz band for the provision of 3G mobile telecom services and the operation of 3G Public Mobile Telecom Networks; and

• An Individual Licence under the Integrated Licensing Regime, which is required by any operator who wishes to use the scarce resources (including the 3G spectrum). An Individual Licence imposes conditions relating to service quality, access, and interconnection, number portability and ownership, shareholding and management arrangements.

These two types of licences are usually issued and their related rights are granted by TRC pursuant to the powers granted to it under the Telecommunications Law.

Within the context of the Integrated Licensing Regime as adopted by the TRC2, and in line with the ICT Sector Policy 2007, every Individual licensee, including but not limited to the current licensed public mobile wireless operators is principally considered eligible to apply for a General Radio Spectrum Licence. TRC is aware that certain telecommunications groups have been created with close management association between its members (Associated Groups). Some of these groups have existence on both of the national and the international levels, and the scope of operations of some of them may be wider than just the telecommunications sector. TRC is concerned to ensure that, in the case of sealed bid auctioning, no collusion between parties who intend to become bidders and between parties who have been accepted as bidders. All applicants, including the existing individual licensees shall be required to submit supporting documentation to establish their independence from the other applicants. Further, TRC appreciates that a new (foreign investor) applicant may wish to apply for a 3G spectrum licences (as a New Entrant), but may not have acquired an Individual Licence nor registered a company which complies with the applicable requirements of the Company Law in Jordan at the time of launching the awarding process for the 3G spectrum licences.

2 http://www.trc.gov.jo/images/stories/pdf/COM_LICENSING_PROGRAM_FINAL_11-00_AM_14-Oct.pdf



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TRC may authorise such New Entrant to compete, provided that he undertakes to fully meet the criteria of obtaining the necessary Individual Licence which focuses on ensuring that he presents an appropriate level of financial, managerial and technical means, experience and capabilities that demonstrate that in conducting the proposed business and providing the service he will use the relevant Scarce Resources in a manner that benefits the public and that no impediments exist relating to the use of Scarce Resources in granting the Licence. More details on the matter are provided in section (5) of the ‘’Instructions Regarding the Application Procedures and Criteria for the Award of Public Telecommunications Individual and Class Licences’’ 3. However, it is the responsibility of that new entrant, if successful in winning a licence, to ensure that a company owned and controlled by such new entrant in accordance with the information provided to TRC and complying with the applicable requirements is established and registered before the deadline for grant of the relevant the 3G spectrum licences. Failure to achieve that registration and/or gaining the individual licence will lead to loosing the rights to use the related spectrum resources, and possible forfeiture of the relevant financial bonds. Having specific consideration to the Government Policy statements as set in paragraph 55:

The Government recognises that the entry of additional providers in the mobile market would stimulate further decreases in prices and an increase in mobile penetration. Accordingly the Government requires the TRC to take actions to promote the entry of additional mobile providers… The TRC shall also examine whether it is desirable to make spectrum capacity available for advanced mobile networks including, but not limited to, third or fourth generation networks (3G/4G), whether for new or existing licensees. This includes the consideration of promoting the utilisation of existing 2G frequency bands for more advanced and efficient services

In summary, TRC proposes to apply the following guideline principles for identifying candidate participants in the process for obtaining the offered spectrum licences:

• All holders of individual licences under the current Integrated Licensing Regime (including incumbent mobile operators), who are not members of an Associated Group, shall be eligible to apply for a:

- (2G + 3G) spectrum licence (“Licence A”) or - (3G) only spectrum licence (“Licence B”);

• Only one member of each Associated Group shall be eligible to apply for a either of the two categories of spectrum licences; and

• New entrants who are not yet individual licensees and not connected with any

of the Associated Groups shall be eligible to apply for either “Licence A” or “Licence B”, provided however that their right to use the spectrum (if they win one of the auctions) shall be suspended until they become in full compliance with the requirements as described in the Integrated Licensing Regime.

3 http://www.trc.gov.jo/images/stories/pdf/LicensingRulesFinal-207-12-2004.pdf?lang=english



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5.2 No need to intervene for ensuring one or more 3G Spectrum Licence for incumbent operators;

The Statement of Government Policy 2007 (Para 43) provides that the TRC should take all such steps as may be necessary in order to facilitate: the rapid entry of new competitors into the ICT sector and, the rapid introduction of new services by those entities, as well as by any existing Licensee. To achieve these two policy objectives, the competitive process for awarding the 3G spectrum licences shall be designed in a way that in the first stage, two 3G spectrum licences will be offered within less than one month of each other. This minimum number of 3G spectrum licences is guaranteed even if all the applicants opt for a {3G-FDD paired spectrum licence of (4 x 2 x 5 MHz). i.e. n = 4}. International practices had been recently reported by “Analysys Consulting Ltd” to a workshop “3G Auctions; Design Options and Global Experience – Nov. 2007”. During that workshop, Analysys stated that:

There have been no 3G auctions limited solely to existing players, Reserving 3G spectrum licences to incumbent operators has been done, by

direct grant only rather than auction (e.g.): o Eastern Europe (Moldova) o Africa (South Africa, Mozambique) o Asia (Sri Lanka)

Restricting the auction to existing mobile operators presents a number of risks: o price not referenced to the wider market for spectrum o weak position to impose or negotiate conditions of the licence

The incumbent 2G – GSM operators were the winners of the majority of the auctioned 3G spectrum licenses,

A “first mover advantage” will also be substantial if the first licence was granted to an incumbent and with a considerable period before the grant of the second or subsequent licences (e.g. more than one month). To alleviate such advantages, some regulators have taken balancing measures in favour of new entrants (e.g. awarding credit points to the new entrants, awarding the first licence to a new entrant, or imposing some conditions on the incumbents like national roaming). Having considered the options, TRC is proposing to fully open the competitive process for awarding the 3G spectrum licences. TRC will not impose any licensing conditions for balancing the inherent advantages of the incumbent operators, nor roll-out obligations for rapid introduction of new services on new entrants.



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Question 3: TRC invites comments on

• The proposed open criteria for identifying eligible applicants for the process of obtaining any of the offered spectrum Licences?

• The proposal to treat all eligible applicants (incumbents and new entrants) on an equal basis?



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Chapter 6 Regulatory Considerations

6.1 Assignment Mechanism In recent years, increasing demand for radio spectrum around the world has made it necessary to ration the most sought-after spectrum, including spectrum used by commercially successful services such as mobile telephony. The two principal approaches for rationing the spectrum are; administrative selection, and market-based selection using auctions. Beauty Contest in the mobile markets, generally speaking, refers to an award system where the award is made based on the judges’ opinion of the bidders planned services, prices and rollout speed. Put it this way, the winners of the spectrum will be chosen by beauty contest according to who would guarantee the lowest cost to consumers, invest the most in infrastructure, stimulate creativity, and so on. In other words, the exact details of so called beauty contest will differ in each case and country. Main feature of this method in awarding spectrum is to provide the regulator with an extensive discretion to negotiate with bidders and make appropriate adjustments in the licence agreement in the name of social welfare. On the other hand, the main opposition arising from this side against auction mechanism is that the auction mechanism to award spectrum could give an unnecessarily high bid prices and the cost of spectrum will be passed on to consumers from operators in the form of higher prices, The merit of selection by beauty contest is that the regulator may use a set of criteria to assess the proposals from different interested parties. A key point of beauty contest is to improve the bargaining power of the regulator to obtain any efficient outcome. However, by setting up clear, fair, competitive, and credible bidding rules instead of negotiating, the regulator could get the most optimal deals from firms, in terms of not only the government revenue but also social welfare. The disadvantage of the beauty contest approach is that, as the licensees will not be required to bid for the spectrum financially, they may have less incentive to use the radio frequency in the most efficient way possible. Auction. The alternative for assigning spectrum is by auction. An auction approach is in general taken as a fair, transparent, objective and economically efficient means leaving the market to decide who will be assigned the spectrum. The major arguments against spectrum auction are potential for overpricing, speculative bidding for subsequent trading, and inherent competitive advantage of big players with financial strength to out-bid smaller players. However, these concerns may be mitigated by a prudently designed set of auction rules. A Majority of countries have chosen to employ auctions and this international experience demonstrates that the exact details of the auction's design will be crucial to its success, and that well-designed auctions are more likely to produce a better outcome.



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Auctions should be held with simple understandable, non-discriminatory and transparent rules and no bidder should be permitted to hold more than one licence and all available spectrum licences should be utilized.

The efficient outcome of the process can be described in terms of the licences being awarded to those parties with the best and strongest business plans. A bidder with a stronger business plan will generally value a licence more than a bidder with a weaker business plan. Additionally, auctions provide transparency, fairness and objectivity.

Being mindful of the anticipated demand for spectrum versus its availability, and taking into account the advantages and disadvantages of the two competitive methods for awarding the 3G spectrum licences, TRC prefers to utilise the auction method for the awarding of spectrum licences in either or both of the 2G (1800 MHz) band and the 3G (2100 MHz) band.

An auction will allow all Bidders to compete fairly on equal terms. However, prior to launching the auctioning process, the TRC shall seek the authorisation of the Council of Ministers to use public tendering for awarding the available 3G spectrum and will take the necessary steps in accordance with Article (32) of the Telecommunications Law.

Question 4: Do you agree that the most appropriate method of awarding a 2G/3G combined licence and 3G only licences in Jordan is by use of an Auction process?



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6.2 Factors to be taken into account in designing the proposed Auction Question 5: TRC would like to invite comments and views concerning the following factors which TRC believes must be taken into account in designing the auction for awarding the offered spectrum licences in the 2G (1800 MHz) and the 3G (2100 MHz) bands. Factors which should be taken into account when designing the auction, include (amongst other things):

1. Method of auctioning, 2. Spectrum configuration of the offered licences, 3. Maximum amount of spectrum per licence 4. What is the schedule for the auctions and how many licences will be offered in

2008? 5. Reserved Prices 6. Procedure to determine the winner(s) 7. Duration of the spectrum licence(s), 8. Fees & Charges, 9. How many stages and crucially when the second stage will start? 10. When the winners of the auction will be permitted to transfer ownership of their

companies? These factors are further discussed and analysed below. 1. Method of Auctioning:

(a) Auction designs in other countries have varied widely in terms of the use of restrictions on bidding rights; activity rules; transparency; the system for bid increments; and the legal and logistical frameworks. Such differences have contributed to the wide divergence in the outcomes between spectrum auctions in different countries.

(b) The effectiveness of a spectrum auction depends critically on its design, which

in Jordan would need to be tailored to take account of local market circumstances and TRC’s specific objectives.

(c) Where auctioning involves multiple spectrum licences, several methods have

been tried including: • Simultaneous auctions, where bidding for a number of licences proceeds at

the same time (e.g. USA and the UK 3G and LMDS auctions). • Sequential auctions, where individual licences are issued in a series of

successive auctions (e.g. the Swiss WLL and Jordanian FBWA auctions).



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(d) The most commonly used auction format is the Simultaneous Multiple-Round Ascending Auction (SMRA), in which multiple lots are sold at the same time, with prices ascending round-by-round until no further bids are received for any lots. However, this method is far more sophisticated and consumes a lengthier timeframe and greater efforts than the sequential auction, and is usually conducted using the internet and with the assistance of a specially designed software facility.

(e) Sequential auctions are far simpler to design and implement, however, they

have also points of weaknesses, e.g.; • The number of competing bidders may descend to a critical limit at the last

auctions in the series, • If time between two successive auctions is too short (less than one month)

the entry price in the higher order auction in the series can be judged by the offered prices of the earlier auction, but applicants may hesitate to submit offers to the earlier auctions, whereby they gain knowledge about the intentions of the competing applicants, and

• On the other hand, if the time difference is too long (more than 3 months), then the early winners will have a major time advantage over later winners, suggesting using the same (or even a descending entry price) for the later auctions in the series.

(f) Sequential auctions can be organized as;

• Single sealed bid auction, or • Multiple ascending bid auction,

(g) TRC has experience of employing “Sequential, Single-round, pay-as-bid Sealed

Bid Auctions”. It is simpler than multi-round auctions, and is TRC’s preferred method for auctioning the pending 2G/3G and 3G spectrum licences.

Having considered the above points, TRC is of the opinion that the auction to award 3G licences will be held in a number of rounds separated in time and each round may be divided into stages, for instance, Round 1 will have two stages: Stage 1 for Licence A and Stage 2 for Licence B. The exact number of Rounds and Licences awarded will be dependent on spectrum requirements and availability. Future Rounds and Stages (if appropriate) will be announced at a later date. However, TRC does not anticipate holding the second round of the auction until after a period of at least six months after the completion of Round 1, Stage 2 as described further in this Consultation Document. 2. Spectrum configuration of the offered licences In 2008, two licenses are offered as follows:

(a) “Licence A” shall be offered to all interested parties. Licence A shall be

composed of a combined 2G/3G package as follows: (1) 3G package: (n) number of paired FDD blocks (“n” x 2 x 5 MHz) of

spectrum in the 2100 MHz band plus an (option for 5 MHz) in the TDD spectrum; and



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(2) 2G package: (m) number of paired FDD blocks (“m” x 2 x 5 MHz) of spectrum in the GSM 1800 MHz band.

(b) “Licence B” will be offered with the following configuration: 3G package: (n)

number of paired FDD blocks (“n” x 2 x 5 MHz) of spectrum in the 2100 MHz band plus an (option for 5 MHz) in the TDD spectrum.

3. Maximum amount of spectrum per licence

(a) Each Applicant to “Licence A” should state his demand for spectrum using the

following format:

(1) How many pairs of FDD blocks (2 x 5 MHz) spectrum in the 3G band, i.e. the value of ”n”,

(2) Whether he wants to exercise the option of acquiring a TDD -5 MHz block, and

(3) How many pairs of FDD blocks (2 x 5 MHz) spectrum in the 2G band, i.e. the value of “m”.

(b) An Applicant to “Licence B” should state his demand of spectrum using the

following format:

(1) How many pairs of FDD blocks (2 x 5 MHz) spectrum in the 3G band, i.e. the value of “n”, and

(2) Whether he wants to exercise the option of acquiring a TDD -5 MHz block (c) The values for (”n” and “m”) shall be integers in the range 2 to 4 inclusive. In

the case of Licence A, there is no requirement that “n” should equal “m”. 4. What is the schedule for the auctions and how many licences will be offered in 2008? Two licences will be auctioned in 2008, these are Licence A and Licence B as defined in design factors 2 and 3 above. The auction for Licence B will commence not later than one month after the completion of the auction for Licence A. Additional licences may be offered in subsequent rounds during 2009/2010 depending on the results of the auctions for Licences A and B and the availability of spectrum.

5. Reserved Prices

(a) Reserved prices for Licence A: the reserved prices for Licence A (3G/FDD

and the 2G/FDD) spectrum will be set by TRC and published in the tender document on the basis of the reserved price for a “unit of spectrum”, where a unit of spectrum in this context means:

- a paired-block (2 x 5 MHz) in case of FDD in each of 2G & 3G bands,



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(b) Reserved prices for Licence B: TRC will determine the reserved prices for Licence B spectrum (3G/FDD) in the light of the offered prices for Licence A. TRC will set and publish the reserved prices for Licence B units in the relevant tender document.

6. Procedure for selecting the winner(s) • Licence A:

The winner of this Licence shall be the bidder who offered the highest aggregated amount of the following: P1 + P2. Where: P1 = the offered price for a unit of 3G spectrum – that is to say, one pair of (2 x 5 MHz)

of the 3G –FDD spectrum; and P2 = the offered price for a unit of 2G spectrum – that is to say one pair of (2 x 5 MHz)

of the 2G –FDD spectrum It should be noted, that only the offered price for a unit of spectrum is taken into account and the number of units (i.e. the values of ‘n’ and ‘m’) is not considered in this calculation. • Licence B:

The winner of this Licence shall be the bidder who offered the highest price for a unit of 3G spectrum – that is to say, one pair of (2 x 5 MHz) of the 3G –FDD spectrum.

It should be noted, that only the offered price for a unit of spectrum is taken into account and the number of units (i.e. the value of ‘n’) is not considered in this instance.

• Price of optional TDD Spectrum The price of the optional TDD (5 MHz) block will be derived from the following formula: P1 x Y% Where: P1 = the offered price for a unit of 3G spectrum – that is to say, one pair of (2 x 5 MHz)

of the 3G –FDD spectrum; and Y% = a multiplier to be established by TRC and published in the relevant tender

documents. 7. Duration of Spectrum Licence All spectrum licences awarded through this auction process will be granted for a term of 15 years. If during the term of this spectrum licence, the licensee’s individual licence expires, such individual licence will be renewed in accordance with TRC’s procedures as published at that time. This does not guarantee the automatic renewal of any other spectrum licence that the licensee may also hold at that time (e.g. earlier 2G frequency license), which will be subject to different renewal procedures.



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8. Fees and Charges The winner of “Licence A’’ or “Licence B’’ will be required to pay the following fees and charges:

(1) Annual fees calculated on the basis of published formulae (2) One time Evacuation charges: will be published in the tender document, and

shall become due for payment in advance at the date of issuance of the relevant spectrum licences

(3) One time Acquisition charges: the offered prices of the winner multiplied by the related requested number “n” and “m” of (2 x 5 MHz) blocks plus the derived price for the (5 MHz) TDD block (if any).

9. How many Rounds, and when will the Second Round Commence This auction will involve as many sequential rounds as deemed necessary and until there is no further 3G spectrum to offer. Based on the results of the first round, TRC will determine and publish the date and conditions of additional rounds to grant further licences, if any. Round 2, will not take place sooner than six months after the completion of the first round. 10. When will the winners in this auction be permitted to transfer ownership of their companies? Companies receiving any licence as a result of this auction process will not be allowed to transfer/change ownership before the elapse of a period of three years from the relevant spectrum license award date.



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Chapter 7 Numbering Requirements & Addressing

7.1 Numbering Requirements In the Jordan National Numbering Plan4, the code “07” is allocated to mobile services. This code is followed by eight digits. The plan provides that the entire range of eight digit numbers {(07 xx xx xx xx) i.e. (07 00 00 00 00) to (07 99 99 99 99)} are to be used in the future, thus the available numbering capacities for mobile services can theoretically be up to 100 million numbers. That plan provides room for up-to five additional mobile network operators, with a capacity of up-to 10 million numbers each. The TRC believes that the branding of 2G and 3G services by number prefix is not necessary as users of both services are free to port their numbers across networks of both generations through MNP. Thus the service code of “07” should be usable for 2G and 3G services and 2G users should be able to keep their existing telephone numbers upon upgrading to 3G services. With a country population of less than 6 million people and even with the continued growth in mobile penetration, TRC is confident that the available number resources are sufficient for the future 3G services.

7.2 IP Addressing arrangements for 3G Services Having in mind that 3G technology employs IP technology, IP addressing will play an increasingly important role in 3G mobile services. The IP addressing system (IPv6) has not yet emerged, there is therefore a need for ongoing compatibility with existing services (i.e. continuing requirement for E.164 numbers).

7.3 3G Services in the 2G Spectrum Normal logic assumes that the existing licensees of the 2G spectrum (900 & 1800 MHz) who intend to invest in the 3G operations are in favour of upgrading their 2G networks and use the 2G spectrum that they already have to gradually provide 3G services. This issue of using the 2G spectrum for providing 3G services has been treated differently in different countries. Commonly it has been permitted in most cases where a beauty contest method was used for selecting the 3G spectrum licensees, while in 4 http://www.trc.gov.jo/images/stories/pdf/National_Numbering_Plan.pdf?lang=english



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cases where competitive bidding was used as a method of selection, it was not permitted to use 2G spectrum for providing 3G services. In these latter cases, the restriction was based on the following principles:

• Allowing the incumbent operators to operate 3G services in the 2G bands would in effect guarantee the incumbent operators the right to operate 3G services even if they failed to obtain a 3G licence or decided not to apply for a licence.

• It is unfair to other 3G spectrum licence applicants. The problem would be most

serious in the initial phase of service launch when the full range of services by the new entrant may not be available with full national coverage.

Removal of the restriction may be considered in the future as the 3G service market matures on the basis of enhancing the efficiency of spectrum utilisation, subject however to the interests of existing 2G consumers being adequately protected. Having considered the relevance of the above principles to the present case in Jordan, TRC intends at this point in time, not to permit any of the existing four Public Mobile Operators to provide 3G services using the spectrum they have previously been assigned in parts of the 800, 900 and 1800 MHz bands.



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INVITATION FOR COMMENTS

TRC seeks input from interested parties on the issues and proposals outlined in this Public Consultation Document. Interested parties are encouraged to submit comments regarding the issues and proposals contained herein to the TRC on or before the deadline shown on the cover page. All comments of the interested parties will be taken into account in the formulation of the final regulations regarding Consultation Regarding Licensing the Use of 3G Cellular Communications Technologies Radio Frequencies in Jordan. However, the TRC is under no obligation to adopt proposals of any particular party or parties. The TRC will post the comments of all parties other than comments classified by TRC as confidential, on its website. Interested parties will have an additional fourteen (14) days to provide input on any issues that are raised in the comments of other parties. This is a Public Consultation Document. As such, the TRC notes that none of the ideas expressed or comments made in this document will necessarily be contained in the statement to be issued. Submissions received by the TRC as a result of this Public Consultation will provide valuable information in helping the TRC to develop the final statement, but the TRC is under no obligation to adopt the positions urged by any party or parties. All communications with the TRC in connection with this Consultation Document should be addressed as follows:

CEO Telecommunications Regulatory Commission P.O. Box 850967 Amman 11185 Jordan Telephone (962) 6-5501120 Facsimile (962) 6-5863641/2 [email protected]

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