April 2000	Morocco Master Report

1. The interaction between business and regulatory constraints

1.1 The regulatory background

The texts applicable to alternative infrastructure operators as well as telecommunication regulations constituted in the new law 24-96 adopted in 1996 allows the running of alternative telecommunications networks as follows :

Article 14 Chapter IV of the law 24-96 relating to Postal Services and Telecommunications

Independent networks can be set up and run by any individual after receiving authorisation outlined by the measures in article 3 issued by ANRT.

This authorisation can only be given if the mentioned networks do not interfere with the technical operation of existing networks. It is subject to a licence fee payment. ANRT specifies, for each case, the conditions under which independent networks can be connected to a public telecommunication network without allowing communication exchange between individuals other than those reserving the use of the network.

Authorisation must be given within 2 month period. Any refusal of authorisation must be justified.

Article 15 chapter V

Terminal equipment is freely supplied without prior authorisation. However when this is for a public telecommunication network it must be given an agreement issued beforehand by ANRT or by a testing and measuring equipment laboratory. The equipment agreement is required in any situation of radio-electrical installation whether or not it is to be connected to a public telecommunication network.

Article 17 Chapter V

Service system

Commercial use of added cost services such as voice telephones whose list is fixed by regulatory channels, can be assured by any individual having placed with ANRT a request of their intention to open this service.

Article 19 Chapter VII

Network system and free installation.

Subject to radio-electric installations and possible terminal equipment conforming to the measures in article 16 the following can be freely established :

• internal networks
• radio-electric installations composed exclusively of low power and range equipment.

Article 20 Chapter VII

The establishment of a telecommunication network by a commercial enterprise including several juridical entities such as the companies or their subsidiaries is free, subject to these juridical entities being located on national territory.

Network usage is exclusively reserved to the sole requirement of the aforementioned company.

However, juridical requirements would be required to assist the running of alternative telecommunication infrastructures present in Morocco.

These legislative measures concern in particular :

• a modification of the definition of an independent network, the present definition being too restrictive. The envisaged modification would enable, on the one hand, to run the same independent network aimed at satisfying if need be the needs of several firm groups of users and on the other hand allow availability of independent network infrastructure for the benefit of public network operators having obtained a licence for this.
• introduction of a text of legislative value expressly forecasting that local collectivities can place in the hands of a private agent, the establishment and running of local networks of civil engineers within the framework of a public service delegation dealing with other activities than telecommunications ( for example the construction of purifying network, electricity …).Such measures would avoid juridical controversy of collectivity power, in the framework of their territorial development plan by promoting the emergence of civil engineering infrastructures subsequently destined to accept networks used by telecommunication operators.

Also, in order to avoid any controversy regarding the power for administrators running public sector and public service agents responsible for alternative infrastructures in the telecommunications area, it could be useful to apply similar arrangements to those appearing in article 22 of the regulatory telecommunication law dated 26 July 1996, adopted in France . Therefore, this arrangement could forecast that :

" In spite of regulatory measures and specifications in use on the date of publication of the present law, the administrators in the State public sector and the users or agents of public services could, in respecting their specific obligations within the public sector, use the installations which they have available to establish telecommunication networks and to allocate them for use in the telecommunication networks."

• completion of article 8 of 24-96 law to extend ANRT’s field of competence concerning the regulation of disputes relating to the distribution of infrastructures.

For all regulatory measures, it would be useful to forecast the following arrangements :

• grant ANRT, as for interconnection, the power to settle possible disputes relating to conditions of installation division in the public sector between one telecommunication operator and another using theses installations. The introduction of this detail in the Dahir of 1915 must be preceded by an amendment to Article 8 of the 24-96 law which forecasts that ANRT is responsible for settling disputes relating to interconnection in order to extend its power to those disputes concerning the division of infrastructure such as that indicated above.
• Enable authorised public sector administrators to impose a telecommunication operator, as soon as the first operator is granted the total capacity available or outside requests are reasonably anticipated, whom has been granted an occupation right in the public sector , to oversize his installations in such a way as to accommodate
• other operators networks and avoid therefore excessive work on the public sector.
• outline the power of authorised public sector administrators when they issue occupation right in this area to telecommunication operators, in particular by imposing them to respect the principal of non-discrimination between operators by assuring transparency of their relationships with the operators and avoiding length delays in the investigation of requests for occupation of the public sector.
• Furthermore, some alterations of the regulatory texts applying to different offices and agents owning infrastructures could usefully be adopted in order to favour the development of their alternative infrastructures.

1.2 Business constraints and entry barriers

Present barriers are essentially juridical as established in our previous reports , in fact the fundamental problem is the juridical purpose of principal alternative network holders who are for the majority part national organisms : it must be extended in order to enable the commercialisation of their telecommunication infrastructures.

These juridical constraints stop network offices, potential alternatives telecommunication networks providers. In fact these organisms have a mission of public service and have been created for this effect. Consequently, the entity status must be analysed to see if their objective authorises them to carry out the following operations :

• Rental of bare fibre.
• Sale of fixed capacity
• Provision of telecommunication services
• Association with a telecommunication operator

The public establishments have a limited objective which does not enable them to carry out any of the above mentioned activities. However, agent companies having larger objectives can accomplish several activities.

For example, article 2 of dahir 1-63-225 of August 5^th 1963 leading to the creation of ONCF (Railway office) limits the office objectives to only those activities regarding the railway.

Also, ONE (electrical office) which only authorises the office to carry out activities relating to electrical energy.

Agent companies have more flexible objectives :

• The company METRAGAZ can, within the framework of its activities, carry out all commercial, industrial and financial operations which are likely to assist its development.
• The Moroccan motorways can, within its objectives, manage and run its personal property and real estate and offer various services which it can, if need be, be allocated to a third party.

We can therefore consider agent companies as ‘active’ alternative infrastructures holders. Public offices through their strict objectives can only use their infrastructures for their own needs whilst their status does not allow annexed activities.

The holders of alternative infrastructures can use three methods when they are authorised to use their network :

• They will be able to set up as telecommunication operators.
• They will be able to rent their networks to telecommunication operators
• They will be able to negotiate a right of way with the telecommunication operator
• The choice depends on juridical, technical, economic and even political factors.

Recommendations:

It is necessary to restructure the texts notably at the status level of certain establishments who are equipped with large telecommunication networks. In addition, a specific regulation of supplies of alternative infrastructures must be studied according to recommendations established by the Office Devotech advises the technical and legal conditions for the supply of alternative infrastructures in Morocco.

In Morocco, several public or private juridical entities use alternative infrastructures. These entities can be categorised as national and local participants. The national participants are mainly National Electric Office (ONE), National Railway Office (ONCF) and National Society of Moroccan Motorways (ADM). As owners of long distance infrastructures, these participants are supposed to play an important role in the alternative infrastructures market.

The local participants are not numerous. IT is, above all, Metragaz, company using Gazoduc in the North of the country, the companies Lydec and Redal are responsible for water and electrical distribution in Casablanca and Rabat.

Note that from present, these local participants do not use any telecommunication infrastructures.

These different participants both national and local, presently do not have any sufficiently developed infrastructures yet they plan, for the future, to develop their networks mainly in optic fibre.

1.2.2 Infrastructures inadequacy

The inadequacy of alternative infrastructures in Morocco seems to be at a national and local level.

National level :

Note that from present national participants have a relatively weak telecommunication infrastructures. However their "physical" infrastructures is quite interesting in the fact that it connects the main towns, mainly : Rabat, Casablanca, Oujda, Marrakech, Tanger, Agadir...The "physical" infrastructure is called to greatly facilitate the deployment of a telecommunication network in their proximity.

The case of National Office of Electricity :

ONE runs 14 706 kilometres of electric lines. Only 400KV and 225 KV lines can be used to supply alternative infrastructures. ONE also plans to deploy a 1000 kilometres network of optic fibre.

On the other hand, the optic fibre network which could be traced on the electrical network will often stop near the cities. Other cables must therefore be pulled to the city centres.

It must also be noted that the network that ONE plans to set up will only be able to serve large cities. What will therefore happen to small towns and rural areas ?

The case of the National Railway Office :

ONCF owns a relatively developed railway system (more than 2000 kilometres of lines). In addition ONCF uses a ground radio system of 947 kilometres of lines and subsidiary networks required for the signalisation and transmission of data on a 956 kilometres area. The office also plans to set up an optic fibre network solely for its own use.

The railway network of ONCF could therefore only constitute an alternative infrastructure as long as the airlifted laying of fibre optic cables on pylons which carry catenaries is foreseen.

The case of the Moroccan Motorway Company of Morocco :

At present the Moroccan Motorway network is very precarious in fact only 286 km motorway are in use today. However ADM plans to establish a motorway network of 1500 km to serve the whole country before the end 2010.

Note also that ADM does not have either a fibre optic network or piping along its motorways, including those under construction. Nevertheless, considering the axes chosen in the construction program, it is felt that ADM could play an important part as an alternative infrastructure provider.

Prospective vision of the different participants.

Taking into account the income which the named participants can obtain from running of their alternative infrastructure, these participants are very interested in any alternatives which enable them to improve their infrastructure. Moreover, some of them have already begun to consider possible investments in this direction.

ONE vision :

As seen above, ONE plans to invest in fibre optic cables however the office does not wish to become a telecommunication operator, but does not exclude the possibility of finalising contracts with operators interested in the capacity of these fibres.

ONE can provide all potential operators with pylons, roofs, terraces, land etc… … in addition to the capacity offered.

ONCF vision :

The ONCF has still not carried out serious research regarding the running of its network. Moreover, as seen earlier, this network was set up specifically for use by the railways.

However the office is aware that it could become a very important negotiator in a right of access negotiation. In fact, the office does not exclude the possibility of investing in telecommunication by finalising agreements with a telecommunication operator benefiting from right of access, and who in exchange would supply the office with its network capacity for its own use.

ONCF, like ONE, could equally provide locations near to its stations.

ADM vision :

ADM is equally interested in the use of its infrastructure especially as it plans to establish a telecommunication network for its own use : communication with toll centres ; network of emergency telephones …

ADM could for example, in partnership with a telecommunication operator, facilitate the installation of cables however the latter must dispatch ADM’s own traffic at their own cost.

Despite ADM vision being very limited on this question, it seems that it could be an important participant for alternative infrastructures.

Local participants vision :

The local participants are not as interested in this type of investment as the national participants. It is true that they do not have either a fibre optic or large " pipes " which they could rent to operators.

It seems clear that therefore the Moroccan infrastructure market is quite embryonic and that a lot of effort must be made with the aim of developing this market.

All of this could delay the liberalisation of alternative infrastructures, especially as it is known that juridical economic and political obstacles hold up this liberalisation too.

Attitude of the incumbent operator towards alternative network providers

The traditional operator presently faces problems with the second GSM regarding the interconnections tariffs which are necessary in the set up of the price tariff if Medi Telecom. It could be thought that Maroc Telecom will benefit from the juridical status quo which presently does not allow the use of alternative networks to provide leased lines rented at high prices which can considerably affect the investment capacity and the pricing policy of Médi Telecom. Equally, for example, the penetration of GSM services in Europe has noticeably been done more slowly in countries where the second operator did not have alternative infrastructures than in those countries where they did.

2.1 Types of companies offering networks

Organisms using alternative telecommunication infrastructures are as follows :

• O.N.E ( National Electricity Office)
• ROYAL AIR MAROC
• ADM ( Moroccan Motorways)
• L’ONCF ( National Railway Office )
• LYDEC ( LYONNAISE DES EAUX CASABLANCA)

2.2 Types of operators using the networks

Presently, no operator uses alternative telecommunication infrastructures, however Médi Telecom would like to develop its backbone around alternative networks in order to have an aggressive pricing policy which will be reduced if Médi Telecom uses Moroccan Telecom Network.