edotco advocates a light touch regulatory regime

As a companion piece to our report on the inaugural TowerXchange and IFC Telecom Tower Regulatory conference, TowerXchange interviewed Rema Devi Nair, Regulatory Advisor to the CEO at Asia’s leading multi-country infrastructure provider, edotco. Rema Devi Nair has been active in the regulatory sphere for more than 20 years, having played a variety of roles including that of regulator, as well as headed regulatory management in a regional capacity at Axiata Group and prior to that at TM International.

TowerXchange: In terms of attracting international investment, innovation and expertise from towercos, what would you advocate be the guiding principles of infrastructure sharing policy and towerco licensing by regulators and other government stakeholders?

Globally, the economic benefits of infrastructure sharing are well recognised by regulators and these include

(i) optimisation of scare resources such as land and roof space

(ii) optimisation of investment between sharing operators

(iii) ability to focus investment in technology and service innovation.

It is widely held that these benefits are best realised if infrastructure sharing policy adopts the following key principles: is actively encouraged (not mandated), is based on commercial arrangements between operators, and is offered on a non-discriminatory basis. Based on these key principles, edotco believes that all forms of infrastructure sharing should be encouraged in order to achieve greater network cost advantages.

The benefits of infrastructure sharing can be further maximised if regulators are open to the licensing of independent towercos. Towercos provide extensive benefits and indeed countries that have established independent tower companies generally enjoy higher levels of sharing as reflected through higher tenancy ratios. We at edotco advocate that towerco licensing should be kept simple and in keeping with global best practice, should be non-exclusive, offered nationwide, focus on passive elements and eligible to well-qualified players.

TowerXchange: From a regulatory perspective, what attracts a company like edotco to invest in a new international tower market?

Business imperatives aside, new market entry is made attractive by at least three key regulatory factors: the first is the market’s commitment to broadband policy and targets, especially a bold pro-infrastructure policy position. Secondly, we seek a stable regulatory environment with a clear authorisation framework for independent towercos, and lastly a liberal FDI (Foreign Direct Investment) framework. The last point, in particular, is critical in the early stages of investment when the presence of large foreign-owned towercos bring much needed experience and economies of scale.

TowerXchange: And on the other hand, what regulatory policies represent a significant disincentive to investment? Are there any outright deal-breakers that render a country’s tower market un-investible?

Typically, the following points tend to disincentivise investment:

- Lack of clarity of the regulatory framework or dated legislation that fails to accommodate innovation and new services

- BOT-type (Build Operate Transfer) arrangements that demand that assets revert to government

- Lack of a holistic, incentive-based framework for FDI

- Prohibitive regulatory fee burden including untenable taxation levels

Certainly protectionist, anti-investment approaches tend to raise red flags. We however we believe in working alongside governments to adopt pro-investment regulatory regimes that benefit the nation.

TowerXchange: How can central and local government authorities best facilitate the accelerated roll out of new telecom infrastructure, whether it be green field towers, rooftop towers, micro sites or even small cells?

Increasingly we note that co-investment strategies between central and local government authorities or utilities becoming essential, particularly in emerging markets facing rapid new infrastructure rollout. In this regard, we feel there are lessons to be drawn from more developed countries, where the creation of an optimal utility deployment coordination framework that meets the dual objectives of efficiency and aesthetics has occurred.  Some specific examples include the multi-user infrastructure corridor approach adopted in Canada, Singapore and Australia.

Other areas for coordination include enhanced rights of way access, adoption of communications code for low impact facilities, establishment of one-stop centres and “dig once” policies.

TowerXchange: Should regulators have any involvement in the pricing of tower builds and tower leases?

We support the principle that regulators should intervene only if there are competition concerns or if there is imminent market failure.

In the case of towers, regulators are more concerned about access to towers and the terms and conditions of such access. If there are no competition concerns, edotco feels that regulators should not regulate pricing, which should be left to be commercially determined between access seekers and access providers.

TowerXchange: Should towercos be licensed?

Given the capital-intensive nature of the towerco business, the granting of a licence provides certainty as to the rights and obligations of potential market players, as well as future proofs their business. This is a critical message that governments put out to potential investors. From a regulator’s perspective, licensing sets a regulatory code that defines the terms and conditions under which players operate. It also sets the terms of market entry and behaviour, whilst ensuring that regulations are adhered to in the public interest.

Against this background, we at edotco support a lightly regulated licensing regime that meets clear policy objectives (e.g. increase infrastructure sharing), which supports the development of new services whilst not adding undue administrative load in the process. We feel that the right license model supported by strong, well-capitalised licensees builds sustainable market structures.

TowerXchange: How can towercos help accelerate rural connectivity initiatives? And should towercos contribute to and/or be able to access universal service funds?

As specialist infrastructure players, towercos are well placed to help accelerate rural connectivity, being able to almost instantly provide crucial infrastructure sharing and co-location. This ability to provide access to multiple operators with speed is central to expanding rural mobile coverage, through the provision of an essential access service. Towercos also bring efficiency to rural operations by allowing operators to outsource attendant services such as maintenance, security, monitoring, surveying and land acquisition.

Accordingly, as with all licencees, towercos should be able to avail themselves of universal service funds to accelerate rural connectivity, depending on the funding mechanism adopted. Universal service approaches should be as simple as possible while providing the best incentive for towercos to expand their network and services.

TowerXchange: How should regulators think about ‘futureproofing’ the regulation and licensing of towercos against the future evolution of the business model, and the evolution of site typologies?

The current towerco business model is on the verge of major changes that will witness the transformation of passive infrastructure and services to the active infra and services. Looking out over the next five years, this evolution may be represented by the emergence of alternative structures such as small cells, connectivity services (including Wi-Fi, IoT and mobile) and active O&M.

Regulators need to be aware of this evolution playing out, or risk regulations becoming redundant against technological and business realities.  Future proofing regulations may demand:

(i) flexibility to extend offered facilities and services e.g. transmission capacity and / or dark fiber

(ii) enhancing infrastructure sharing through an open access model

(iii) permitting active sharing involving technically more complex sharing of radio access networks and antennas by operators.