Iranian Telecom sector: History, Governance and Regulation

Iranian Telecom sector: History, Governance and Regulation

Iranian Telecom sector: History, Governance and Regulation

 

IRAN is one of the most interesting telecom markets in the Middle East based on demographic and economic figures as well as high penetration rate of telecom and internet services in the market.Reducing economic sanctions paves the way for increased foreign investment and development of telecom network and services. Informing about governance structure and especially regulation body is important for new entrant especially who wants to invest or start a cooperation with Iranian telecom companies.

Telecom in Iran: Historical background

The first telegraph line commenced in Tehran in 1857 and the first telephone switching center started to work in 1925 by the capacity of 1200 lines in Tehran butFormaltelecomsector in Iran was commenced by opening up the Ministry of Posts, Telegraph and Telephone in 1929. After that all investments and operational activities relating to fixed line phones went under control of government. Telecommunication Company of Iran (TCI) established in 1971 (by separating telephone sector from the ministry) with a new organizational structure under control of government. Iran Telecommunication Industries (ITI) was also founded in the same year to manufacture the required equipment for the national long-distance network. TCI has monopoly over Iran's fixed line infrastructure as well asthe largest fixed and cellular operator (MCI) and Internet service provider in the country.

Regarding to technological development and changing the mission of government in telecom sector a new bill approved in Iranian Parliament in 2003 on Ministry of Information and Communications Technology (previously named Post, Telegraph and telephone) authorization and responsibilities in telecom sector. Under this law, Communication Regulatory Authority of Iran (CRA) was established.

Governance structure of Telecom sector in IRAN

 

The telecom sector in Iran includes both state organization and private sector including operators. Ministry of Information and Communications Technology (ICT) and its subsidiary organization and companies are main governmental body of ICT in Iran.  Also there are other state organization like Supreme Council of Cyberspace (SCC) and competition council which affect telecom policies and high level regulation.

 

Source: Teyf Group (blocks & relations is simplified)

Supreme Council of Cyberspace (SCC)

SSC is the National Cyberspace Council was founded by supreme leader Ayatollah Khameni in March 2010 for Coordination of all policies, plans, activities relating to the cyberspace (including telecoms and internet).

Head of SCC is the president Hassan Rouhani and he selects the secretary of the council.As of 2015, SCC has 26 members which members are composed of 17 Ministries and high level national organizations related to technology, security and culture. Remaining delegates are 9 experts which appointed by supreme leader for SCC.

The responsibilities of the council are determining the national cyberspace policies, coordinating among organizations and avoiding parallelism in cyberspace policies as well as ICT nationalmega-projects ratificationand setting policies for synergy among government and private sector to exploit ICT for development of the knowledge-based economy.

Communication Regulator Body

Generally, telecomsector in Iran is regulated by the Ministry of Communications and Information Technology (MICT).  MICT is responsible for all aspects of telecoms sector regulation and for the adjudication of disputes that arise among service providers.Based on article 7 of Law of Scope of Duties and Authority of MICT (approved by Parliament in 2003), the ministry established the Regulation body to license and supervise all telecom networks and services and promote competition in the sector.

The MICT regulation imposed by two sections: Communication Regulatory Commission and Communication Regulatory Authority (CRA). The commission is the decision making part and the CRA is decision shaping and operational body of telecom regulation.

The commission has 9 membershas 26 members which thepresident and the secretary of commission are ICT minister and head of CRA, respectively. CRA is responsible to prepare rules and regulation and send it to commission for ratification. Also CRA mission includes issuing telecom individual and class licenses in all sectors, national spectrum allocation and assignment affairs, to watch competition in telecom market as well as control operator’slicense commitments, QoS and customer care. According to CRA, the main objectives of CRA are as follows:

·         Achieving a competitive and balanced market for providing new and comprehensive services with reasonable costs in the field of ICT as the infrastructure for the State development in all aspects;

·         Access of public to communications and information technology with reasonable cost and quality;

·         Optimum and efficient utilization of radio frequency spectrum and key strategic areas: Radio communications; Communications and information technology regulatory

TIC: State-own telecom backboneCompany

Telecommunication Infrastructure Company (TIC) is a governmental body in Telecom market, providing main national and international communications infrastructure previously was as a part of Telecom Company of Iran (TCI) but before privatization of TCI in 2009, separated from TCI and remain in the hand of government according to Article. 44 of the Constitution. TIC is responsible for providing the necessary backbone infrastructure in the country as a telecom network provider between provinces and international gateway for all operators. Main Objectives of TIC is to develop the national telecom backbones in order to provide the reliable and secure infrastructural services to all telecom operators.

TIC is aiming to grow international transit from 6.2Tbps by the year end to 20Tbps by 2020. Furthermore it has a target to increase its internal IP network from 4Tbps to 40Tbps over the next four years.

TIC operates over 58,000km of fiber-optic network in Iran and is aiming to position the country as an alternate terrestrial route for traffic between Europe and Asia.

Carriers, however, will be encouraged by the initial openness of TIC after sanctions, both in its promotion of international transit and the measures it is taking to attract investment in its domestic market.

Privatization of Telecommunication Company of Iran (TCI)

The government's privatization program also forms part of a wide-ranging economic liberalization program. Under Iran's Fourth Five-Year Economic Development Plan (2005-2010), the Iranian Privatization Organization, which is affiliated with the Ministry of Economic Affairs and Finance, was charged with the responsibility for setting prices, ceding shares to the general public and listing shares on the stock market of incumbent operator Telecommunication Company of Iran (TCI).In 2007, Supreme Leader Ayatollah Ali Khamenei urged the government and officials to speed up moves to reduce the government's economic role by reviving the privatization process.

In May 2007, a representative from the Iranian Privatization Organization announced that a majority stake in monopoly incumbent telecom provider, TCI, would be sold.

Despite the early optimism surrounding the privatization of TCI, by end-2007, no visible progress had been made towards achieving this goal especially regarding to international and political situation of Iran for its nuclear dispute. In September 2007, MICT announced 50%+1 share block of TCI would be privatized. 20% remain in hands of government, 20% would be belong to an investment fund organizationfor poor Iranian families (Sahame-edalat) and another 5% is held by employees.

As a forerunner to the sale of a controlling stake in TCI, a 5% stake in the operator scheduled to be floated on the Tehran Stock Exchange before the end of December 2007. The floatation finally took place in August 2008.

In late September 2009, it was reported that local consortium Tose'eEtemadMobin(TEM) paid more than USD7.8bn to secure a 50% plus one share stake in TCI. EtemadMobin comprises three companies.

 

 

 

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