LTA Shifts to Universal License Regime

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The Liberia Telecommunications Authority has made the transition to its new Universal License Regime, which allows operators to deploy a wide range of technologies without having to seek an individual license for each technology, as has been the practice in the industry.

The new License Regime, also known for its “technology neutral” licensing approach, sets out to accomplish several things. First, under the Universal License, providers will no longer need seperate licenses for their different services. There will be one license fee for any and all services an operator wishes to deploy to subscribers.

The Universal License also aims to establish a more proportional pricing structure that requires operators to pay based on usage. Operators will now pay fees corresponding with the scale of usage on their respective networks. This pricing structure opens up a third advantage of the new license regime. The scalable pricing structure under the Universal License regime will also lower the entry barrier for investment in the telecommunications inudstry. Entrepreneurs aiming to introduce services in market segments of any size would not be subject to the prohibitive license fees as though they were major players like Lonestar and Cellcom.

A source at the LTA suggests that the new regime is more favorable toward the survivability of smaller players in the of small players. The new regime is a major paradigm shift in the business model of the regulator, which should see more revenue come “from regulatory and numbering fees” than license fees.

“The future of telecommunications is moving away from voice toward data,” the LTA source told the Daily Observer, explaining that the level of flexibility for innovation enabled by data far exceeds what can be achieved using voice-only technology. “Even the Voice Over Internet Protocol (VOIP) technology — making telephone calls over the internet or through a local area netowrk — is a function of data,” the source said.

After months of discussions with the stakeholders, the LTA promulgated new regulations that provided for the migration by operators to the new Universal License Regime. Following the promulgations of the Regulations, the LTA and the operators engaged in negotiations for the migration by operators to the new regime.

It is not clear what time frame LTA has set for existing telecommunications operators to migrate to the new regime. However, our source disclosed that Cellcom Telecommunications Inc. (Cellcom) is the first to have successfully concluded negotiations with the LTA for the migration.

Sources say the negotiations for migration are not as simple as the implied benefits. Operators who had paid license fees for several years in advance, will have to go through meticulous negotiations, as Cellcom did, with the regulator to meet the migration. The negotiations with Cellcom are said to have been very meticulous, with concessions made on both sides; and lasted into the wee hours of last weekend.

Following successful negotiations, both the LTA and Cellcom, on Saturday evening signed the new technology neutral (Universal) License Regime; thus making Cellcom the first Operator to acquire the new Universal License. According to our source, the license fee under the Universal License Regime will now be based on a 3% surrender of gross turnover, instead of a fixed annual license fee. This fee is in addition to other regulatory fees for spectrum and number blocks, as well as administrative fees.

Cellcom, one of the leading service provider in value-added services in the Liberian telecommunications industry, is migrating to further leverage its “4G” technology to provide new services and products to its subscribers. The new license regime provides Cellcom another unique opportunity to continue to lead the industry in new services and products.

Some operators are said to be skeptical about the new regime, as this is not the first licensing regime migration ordered by the regulator. However, our LTA source explained that the constant, rapid changes in the technology industry make it necessary for the LTA to adjust its regulatory activities accordingly, in order to stay relevant in the industry while meeting its fiscal obligations to the Government of Liberia.

One industry analyst told this paper that, “the LTA has again demonstrated astute leadership ability and maturity in regulating the sector by transitioning to a more flexible and conducive license regime.

“The fact that the LTA have already concluded a new license with one of the service providers shows that they were able to address the concerns for an orderly transition from one license to another, especially in respect of how the fees are treated under the new license. I had expected that the negotiations would have been more difficult because initially, the LTA demands with respect to fees were exorbitant and not consistent with the spirit of the new licenses. The action by LTA Commissioners to conclude negotiations and sign a License with one of the Operators clearly demonstrates the LTA and Operators’ desire to promote a vibrant telecommunications sector for the good of Liberia. For this, we must recognize and applaud such effort.”

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