, _,I(_../ - C ·1P~(T 3/17 • Telecommunications Policy Update Development Council Meeting, 1997 September 12 to 13 Telecommunications Policy and Bill A Telecommunications Advisory Committee has been established. It consists of public and private sector interests in the telecommunications and information systems sectors. After wide consultations, the Committee has identified and documented all the policy issues that were omitted from the existing policy document, incl.uqing those pertaining to wireless telecommunications and spectrum management. See appendix 1. The Advisory Committee will meet over the weekend of 1997 September 19 to: ' • Complete the first draft of the Spectrum Management Policy; and • Assess the new policy options being proposed and develop a position paper for my guidance and approval. Consequent on the acceptance of the position paper a date will be set for the reconvening of the Joint Select Committee. The House has already been put on notice. page 1 of 3 pages UWI L ibr ari es • Telecommunications Policy Update Development Council Meeting, 1997 September 12 to 13 Cellular Licences There are three (3) applications for cellular licences - GPO, Dolphin Technologies and lnfoChannel. Draft licences have been prepared after meetings and discussions with each applicant, the OUR, the Post and Telecommunications Dep~rtment and the Attorney General's Department. The draft licences were discussed with the applicants, they were circulated for revision oy all the key players and their recommendations where appropriate have been reflected in the various drafts. All the final draft licences are with the Attorney General's Department. - · .. The Attorney General's Department has been requested to advise on the following: • Is there a specific regulation which makes reference to and from which the Minister derives authority to grant a licence and impose a fee, to establish, maintain or use a cellular network? and • Should the Minister grant a cellular licence, what are the implications in relation to TOJ's monopoly regarding interconnection? page 2 of 3 pages UWI L ibr ari es • Telecommunications Policy Update Development Council Meeting, 1997 September 12 to 13 The Office of Utility Regulation (OUR) has advised that they cannot recommend the granting of Local Multi-point Distribution Service (LMDS), Local Multi-point Wireless Service (LMWS) or Cellular licences, at this time, for the following reasons: • The spectrum, which is both a limited and a valuable resource can only support two (2) cellular providers, and until a spectrum management policy is formulated, it would not be prudent to grant a cellular licence to anyone other than the dominant -telecommunications provider, who is already providing that s,ervice; and • A transparent, open and fair methodology for evaluating and awarding such licences to use the spectrum and the provision of the services, is not yet in place. The Ministry of Public Utilities and Transport will have all these policies and systems in place and functional to allow the OUR to be in a position to process applications as of 1998 February 01. While no licence has been granted to date, the Ministry has­ maintained constant dialogue with all applicants who have applied for licences. page 3 of 3 pages UWI L ibr ari es • Appendix 1 Issues for the Joint Select Committee, Telecommunications Bill 1. Competition in non-exclusive areas; international and domestic data services, cellular and PBX supply. 2. Amend Bill so that TOJ and other licensed telecommunications providers become "approved organisations" within the meaning of the OUR Act. 3. Amend Bill to make it clear that the licencing procedure in the OUR Act will apply to the issue of telecommunications licences in the future. 4. ~Amend Bill to reflect the clarified powers of the OUR to .. administer the "first refusal process" 5. Amend Bill to make it clear that TOJ and other providers are entitled to provide data communication services without the need for a licence. 6. Amend the Bill to provide licencing of TOJ and other cellular providers in Jamaica. 7. Amend the Bill to grant explicit authority to issue additional wireless licences for PCS. 8. Bill to allow customers the right to connect to the telephone network any PBX which meets the required tech~ical standards. page 1 of 3 pages UWI L ibr ari es • ,· Appendix 1 Contd. Issues for the Joint Select Committee, Telecommunications Bill 9. Bill to include a specific interconnection regime which defines the obligations of TOJ and its competitors, in respect of, interconnection vis-a-vis data services and wireless, and explicitly establishes the powers of the OUR in this area. CONCERNS 1 Proper monitoring of the capital investment programme to ensure that the goal of universal service is met. .2 Should investment for value added services/premium services be included into the guaranteed return on investment? BUSINESS IMPLICATIONS 3 Need for adequate balance in the investments with any bias being towards universal service. BUSINESS IMPLICATIONS 4 Are the numbers indicating that the mandate of universal service is being met from the investments? 5 Are the numbers indicating that the additional lines are for new· service areas or for areas already having service? page 2 of 3 pages UWI L ibr ari es • Appendix 1 Contd . Issues for the Joint Select Committee, Telecommunications Bill ,-6 • Should the increase in respect of premium services/value • added services be amplified to obtain the subsidy needed since the averaged Joe or Jill will not be impacted? 7 As a matter of urgency, there should be a sustained rush to increase the number of "universal" subscribers so that if and when income from international calls decline then the additional costs will not be concentrated on too few customers. Calvin R. Gray 1997 April page 3 of 3 pages UWI L ibr ari es FROM: NATIONAL DEVELOPMENT BANK PHONE NO. 876 929 6996 Sep. 10 1997 06:26PM P2 J)C • •• ✓ F1fP{NlJB) 6/07 BRIEF ON THE NOB'S RESOURCE POSITION The NDB continues to experience a ve1y serious resource problem~ despite • the recently announced effmts by the Goverrnnent of Jan1aica to mobilize resources for the institution. Decisi9n to Discontinue Lending At its meeting in March, 1997 the NDB Board of Directors took a decision to discontinue making new loan corrunitJnents. This was a direct result of the very serious resmffce problem which was recognised at that time. The Director of Finance in that meeting, advised the members of the Board that following several months of deterioration the resource gap in United States currency was minus US$12.99M and in local dollars minus J$350.2M. This was the extent by which the Bank was over connnitted, consequent on the fact that all existing lines of credit were fully committed. There were no prospects at that time, for new lines of credit from the traditional creditors (i.e. EIB, CDB, TBRD and IDB). The Bank had a loan demand or project pipeline amounting to US$33.9M and J$247.8M. The combined resource needs of the institution therefore amounted to a total of US$46.89M and J$598.0M. Recent Government Decisions During the recent Budget Debate, the Govem.ment announced two significant changes in the modus operandi of the NDB. These related to - a) the reduction in the NDB lending rate from twenty-six percent (26%) to thirteen percent (13%) effective as of April 1, 1997 and UWI L ibr ari es FROM : NAT I ONAL DEVELOPMENT BANf< PHOi'lE NO. 876 929 6996 Sep. 10 1997 06:26PM P3 -.• 2 b) the decision to resume direct lending albeit to a limited extent. These two changes have resulted in an increased demand for NDB funds and increased pressure on the Bank's Cash Flow consequent on the projected loss of interest income occasioned by the reduction in jnterest rates. Efforts at Mobilizing Resources Local Dollars Over the past five and a half months, with the assistance of the Government of Jamaica, tl1e Bank has been able to mobilize the amount of J$200M with prospects for the mobilization of another J$f SOM by the end of September. • Set out below are some particulars regarding t11e actual and 1,rojected amoWits mobilized. March 27, 1997 Aug. 15, 1997 NIA N/A Source NIBJ MOF (via NIBJ) MOF BNS Loan United States Dollars J$100M J$100M J$100M->i­ J$350M~ J$650M Interest Rate 23 .5% 0.0% (Capital Injection) 0.0% II II 12.0% There was also a recent announcement that the Government of Jamaica has been able to mobilize the amount of US$20M in the local capital market. Based on preliminary discussions with officials of the Ministry of Finance however the NOB is likely to be provided with US$ l OM of these funds at a cost of 9.50% for a period of five years. UWI L ibr ari es ~OM : NAT I ONAL DElJELIJPMENT BANI< F'HOl'-lE NO. 876 929 6996 Sep. 10 1997 06:27PM P4 3 These high cost fonds may however be utilized only for direct lending since the coupon rate of nine point five percent (9.5%) exceeds the cuITent NDB wholesale lending rate of nine percent (9%). We are at this time unaware of any plans or arrangen1ents by the Ministry of Finance to mobilize additlonal resources for the NDB. Current Status As at 1 997 September 10 the date of the most recent Board meeting, the resource gap in United States currency is minus US$9.297 and in local dollars minus 1$204.524. The projected inflows via the G.O.J capital injection (J$100M) together with the proceeds of the BNS loan of J$350M should address the local dollar resource gap and place the Bank in a positive resource position of 1$245 .SM. This however, does not take into consideration existing current liabilities which amount to J$98M. These relate to Company Tax of J$55M and amounts due to NIBJ on the Billion dollar facility (J$43M). The net position after settling these debts would therefore be a positive resource position of J$147.5M. It should be clear therefore that tl1e Bank wou)d still be in a marginal position given the value of the existing pipeline is of the order of J$320M. The projected inflows of US$10M via the proceeds of the G.O.J US$20M Bond Issue wouJd just about address the current resource gap. At this time . the value of the project pipeline for projects requiring foreign currency funding is of the order of approxiinately US$57 _OM. Conclusion Recent efforts by the Ministry of Finance have begun to address the resource needs of the NOB and these are appreciated. However, it must be recognised that more concerted efforts will have to be made to ensure that the situation does not ever deteriorate to the point from which we are beginning to emerge. UWI L ibr ari es