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The Impact of Liberalizing the Telecommunication Sector in Morocco

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 The Impact of Liberalizing the Telecommunication
Sector in Morocco
Lahcen ACHY1

November 2005

Introduction
Over the last decade, the telecommunication sector has embarked in a period of deep
change initiated by technological innovation, liberalization of national markets, and by
partial or full liberalization of incumbent operators. Historically, telecom operators were
state-owned and vertically integrated monopolists. Due to large fixed costs of building a
network, the activity of providing telecommunication services was considered as natural
monopoly. However, technological progress and innovation generated new transmission
systems and decreased the cost of building infrastructure. Therefore, the idea of a
natural monopoly is no longer seen as valid. In addition, evidence indicates that the
absence of competition does not provide incentives to decrease costs, leads to
inefficiencies and welfare loss. As a consequence, most historical operators, all over the
world, have been subjected to privatization plans.

Since the early nineties, Morocco, like most other countries, has put substantial
emphasis on telecommunication and information technologies because of their role in
the digital age. The significant development recorded over the last decade can be traced
back to three major causes: legal and institutional telecommunications reforms; political
openness and democratisation; and, technological changes.

The purpose of this paper is to present the major developments recorded in

telecommunication sector in Morocco and assess the impact of regulating the
telecommunication sector in Morocco along the European Union lines. The basic
assumption underlying this work is the following. Further liberalization of various
market segments of the telecommunication sector would benefit communications
intensive industries that provide key “backbone services” to the economy, such as
transport, distribution and finance. It would also improve competitiveness of exporting
industries by reducing their costs and facilitating their integration to transnational
production networks. The quality and price of telecommunication services directly
affect business costs, but also affects the capacity of firms to network and compete in
foreign and domestic markets. Finally, development of telecommunication services
sector would create more investment opportunities for the domestic private sector, and
help attract more FDI and portfolio investment. Regulatory reforms that inject more
competition in markets for services and network industries are, in turn, instrumental in
forcing operators to improve efficiency and pass on the lower production costs to users.
But because in many developing countries domestic providers of services often operate
1
Valuable research assistance has been provided by A. IRALI and A. HASSANI.

1
below international efficiency standards, opening up markets to competition has to go in
tandem with lowering trade barriers in services and making room for increased foreign
entry in domestic markets. Cross-border supply of almost all services relies on
telecommunication services. From the Moroccan perspective, it is an area where trained
and cheap labor force can represent a significant comparative advantage.

However, better performance in Telecom may result from liberalization, but is also
partly driven by economic development. Income growth bolsters demand for
telecommunications and networking services, both from businesses and households, and
at the same time provides the financial resources for investment necessary to expand the
telecommunications infrastructure. Moreover, in higher-income countries services
markets are generally more competitive, so that further empirical analysis is needed to
disentangle the impact of market liberalization from that of economic development and
other factors2.

The association agreement between the European Union and Morocco, which entered
into force in March 2000, represents the legal basis of EU-Morocco relations. This
agreement provides for the gradual establishment of an industrial free-trade zone by
2012 and progressive liberalization of trade in agriculture. The agreement between
Morocco and the EU foresees, in addition to that, to start negotiations for a free trade
area in services. Although the signed agreement contains no binding commitments in
the area of services, it has provisions on freedom of establishment, free movement of
capital and competition rules. In addition, Morocco is expected to deepen further its
relationships with Europe within the framework of the “Neighboring Policy”. In
addition, As WTO member, Morocco has committed itself to gradually liberalize its
telecommunication services, and signed a FTA with the US that covers
telecommunication services.

So far, the potential impact of liberalizing trade in goods on the Moroccan economy has
received a relatively significant academic attention (Rutherford and Tarr (1997), Chater
and Hamdouch (2001), Achy and Milgram (2003) and Chater (2004)). In contrast, the
potential impact of liberalizing trade in services in general, and telecommunications
services more specifically, have not received comparable interest. The main objective of
this research is to filling this gap in the literature. The potential impact of liberalizing
telecommunications services goes beyond the telecommunication sector itself since
these services enter as intermediate inputs in other activities. Further liberalization is
expected to lead to increase competition, decrease prices for users, and improve quality
and access to various telecommunications services.

The rest of this paper is organized as follows. The first section presents the major
developments in the Telecommunication sector in Morocco. Section two examines the
Moroccan regulations as well as institutions in charge of supervising
Telecommunication sector activity. Section three computes the degree of trade
restrictiveness in this sector in Morocco with respect to that of the European Union.
Section four provides a first approximation of the potential welfare effects of

2
Rosotto , Sekkat and Varoudakis, "Opening up Telecommunications to competition and MENA
integration in the World economy".

2
harmonizing the Moroccan regulations in the Telecommunication sector with those of
the EU. Finally, section five concludes.

1. Major developments in the telecommunication sector

a. Major regulatory and institutional developments

Telecommunication sector in Morocco recorded remarkable changes over the last

decade in its regulatory framework as well as in its market structure. Before the
issuance of the law 24-96 in 1997, telecommunication sector in Morocco was controlled
and run by a state monopoly company. This legal framework replaced a very old
legislation that goes back to 1924, which reserved an exclusive right for the state
monopoly of wire line and wireless telegraphs and telephones. The law of 1984 simply
transferred the same monopoly to a state-owned company: the Post Office and
Telecommunications Board3”.

The Moroccan government has recognized, relatively earlier than other countries in the
region, the potential of telecommunication sector to become an essential pillar for
economic development. The need for reform, including privatization and competition
within the telecom sector, started in the late eighties and led to the adoption by the
Moroccan parliament of the law 24-96 in 1997 following almost seven years of
deliberation.

As a result of the telecommunication law of 1997, the Post Office and

Telecommunications Board (ONPT 4) was restructured and two entities have been
created in 1998: Itissalat Al Maghrib (IAM) or Maroc Telecom S.A. for
telecommunications, and Barid Al Maghrib for postal services. The Law also set up the
National Telecommunications Regulation Agency (ANRT5), an independent entity in
charge of regulating the telecommunications services.

A second Global Satellite Messaging (GSM) license was granted in August 1999 and
inaugurated in April 2000 for fifteen years. The license guarantees that no third cellular
license will be awarded before August 2003. The winning bidder, Medi telecom, a
consortium led by Spain’s Telefonica paid an amount of DH 10.6 billion, which is the
equivalent of US $ 1.1 billion. Medi telecom is owned by a consortium of international
telecom operators – Telefonica S.A. (30.5%), and Portugal Telecom S.A. – (30.5%) in
addition to Moroccan institutional and financial investors led by the BMCE Bank (20%)
and CDG6 (8%). Relative to Morocco’s population size, this is the highest fee ever paid
for a mobile license

3
Office National de Postes et des Télécommunications (ONPT).
4
ONPT: Office National des Postes et Télécommunication
5
ANRT: Agence National de Réglementation des Télécommunications
6
CDG: Caisse de dépôt et de Gestion, which is a public financial institution.

3
In conformity with the law 24-96, value added services7 were also liberalized and full
competition has been introduced in their supply. Companies such as European Datacom
Maghreb, Globalstar North Africa, Orbcomm Maghreb, Soremar and Thuraya
Maghreb, are competing on the GMPCS8 market. Companies such as Cimcom, Gulfsat
Maghreb, and Space Com are providing VSAT9s services. Competition also exists for
data transmission, internet services, and cybercafés. The market for value added
services is still underdeveloped or even declining in some of its segments (National
leased lines and X-25 for instance). It continues also to be excessively dominated by the
historical operator, Maroc Telecom. As internet service provider, Maroc Telecom
operates under the commercial brand “Menara”, it controls over 90 percent the market
and keeps all other “competitors” in a very marginal position.

In January 2001, the incumbent operator “Maroc Telecom” was partially privatized by
transferring 35 per cent of its capital to Vivendi Universal for DH 23.3 billion or the
equivalent of US $ 2.3 billion.

On 24 April 2002, the ANRT issued a "call for tender" for the granting of a second
fixed telephony license, which should have ended the monopoly of Maroc Telecom.
However, due to the global situation in the telecommunications sector and the need for
the ANRT to prove its credibility and effective independence from the executive, the
tender received no bids before the deadline.

The telecommunications law (24-96) has been amended and completed by the
promulgation of the new law (55-01), which came into effect in November 2004. The
new legal framework aims at promoting investment in various segments of
telecommunications services, ensure a rational use existing infrastructure, promote
research and innovation in telecom related activities, and provide the legal and financial
means for universal service, which accounts internet as one of its components according
to the law. The regulatory agency (ANRT) has also been given wider prerogatives to
monitor competition, arbitrate disputes, and impose penalties on anticompetitive
practices.

Vivendi Universal agreed with the Moroccan government in November 2004 to increase
its stake in Maroc Telecom from 35 to 51 percent. The agreement took effect in January
2005. The deal amounts to DH 12.4 billion, or approximately $ 1.4 billion. This sum

7
According to WTO, value-added telecommunication services are telecommunications for which
suppliers “add value” to the customer's information by enhancing its form or content or by providing for
its storage and retrieval.
8
GMPCS is a personal communication system providing transnational, regional or global coverage from
a constellation of satellites accessible with small and easily transportable terminals. GMPCS services
include two-way voice, fax, messaging, data and even broadband multimedia.
9
VSAT stands for Very Small Aperture Terminals and refers to receive/transmit terminals installed at
dispersed sites connecting to a central hub via satellite using small diameter antenna dishes. VSAT
technology represents a cost effective solution for users seeking an independent communications network
connecting a large number of geographically dispersed sites. VSAT networks offer value-added satellite-
based services capable of supporting the Internet, data, LAN, voice/fax communications, and can provide
powerful, dependable private and public network communications solutions.

4
 includes the value of the additional 16% stake in the capital and a premium for
continuing control by Vivendi Universal.

A further step in the privatization of Maroc Telecom has been made when the
government decided to sell another 14.9 percent of the capital through an international
public offering. The offering, which ran from 22 November to 7 December 2004, was
oversubscribed 21 times. This IPO is the first international equity offering and offshore
listing of a Moroccan company. It led to an allocation of 30 percent of the offering to
overseas institutional investors, and the rest, 70 percent, to national investors (44
percent for corporate entities, 23 percent for individual investors and 3 percent for
Maroc Telecom personnel). The Maroc Telecom IPO allowed the government to collect
nearly US $ 1 billion.

The process of liberalization has been reinforced by launching the second "call for
tender" for the second fixed-telephony license that was finally granted to Medi telecom
in July 2005 for DH 75 million. The license covers a local loop network, an inter-urban
network, and an international network. Medi Telecom is expected to be operational on
the fixed telephony market at the beginning of 2006.

{Insert Figure 1}

More recently, in September 2005, Maroc Connect, the second Internet service provider
in Morocco, was awarded the third fixed-telephony license by the National
Telecommunications Regulatory Agency. The license provides for offering fixed line
phone services within a 35km area. The capital of Maroc Connect is equally shared
between “Attijari-Capital Risque” and “Fipar Holding” respectively subsidiaries of
ONA10 and CDG. The company paid DH 306 million or about US $34 million to the
government and is committed to invest some US $ 110 million before the end of the
first year of the contract.

The unilateral reform process was supported by multilateral commitments made by

Morocco under the WTO's General Agreement on Trade in Services (GATS). Morocco
participated in telecommunications negotiations (Telecommunications Agreement)
under GATS which started in 1996 and made commitments that were annexed to the
Fourth Protocol of GATS in February 1997 and went into effect in January 1998.
Morocco committed not to impose any restrictions on market access for cross-border
supply (mode 1), and consumption abroad (mode 2) for value added services (excluding
telephone and telex). It has also committed not to impose any limitations on national
treatment for the same services. A schedule of specific commitments that completes the
1997 commitments has been offered by the Moroccan authorities and came into force in
October 2000. It indicates in a more comprehensive way the various commitments made
by Morocco under each of the four modes of supply of telecommunications services.
Morocco committed to keep some activities such fixed telephony, telex services and
ISDN11 under monopoly of Maroc Telecom until the end of 2001. However, for the

10
ONA is the largest private financial holding in Morocco.
11
ISDN: Integrated Service Data Network

5
extent of foreign participation in Maroc Telecom capital, no biding commitment has
been scheduled. So far, Morocco has fulfilled its commitments and has even gone
beyond as presented earlier.

<Insert table 1>

b. Major developments in basic telecommunication indicators

The telecommunication sector in Morocco expanded steadily following the process of

its liberalization. The expansion has been particularly remarkable for the mobile
telephony.

The number of telephone fixed lines increased from 400 000 lines in 1990 to almost
1 500 000 lines in 2000. However, due to the cream-skimming effect from the mobile,
this number decreased by some 22 percent in 2001 and stagnated in 2002. The demand
for the mainline network has been rising since 2003 driven essentially by an increasing
demand for Internet connection. In 2004, Morocco has a telephone density of less than
fifty lines per one thousand inhabitants, which is very low in comparison with other
countries with the same level of economic development. In 2002, the average telephone
density for middle income countries is 167 mainlines per 1000 people, 107 for MENA
region and 585 for high income countries12. The demand for fixed lines continues to be
dominated by residential subscriptions that represent 68 percent of the market,
compared to 22 percent for professional use, and the rest, 10 percent, for public phones.

Regarding mobile telephone services, Morocco is referred to a success story in the

region. Since March 2000, the mobile telephone market has been shared between two
operators: Maroc Télécom and Méditel. Their market shares at the end of 2004 are
respectively 67.5 and 32.5 percent. The number of subscribers rose from less than
400 000 subscribers in 1999 to 2.852 million in 2000, 6.2 million in 2002, and 9.3
million subscribers by the end of 2004. The last figures released by the ANRT for the
end of September 2005 indicate that the total number of mobile subscribers in Morocco
is approaching 12 million. Many remote areas with no previous telephone services are
currently covered by the mobile phone network.

{Insert Table 2}

The spectacular boom of the mobile network has enabled Morocco to compensate for its
lag in fixed line services and even to catch up with other middle income countries in
terms of overall telephone penetration. This indicator stood at 35.4 percent at the end of
2004 and more than 40 percent on the basis of the last available figures of September
2005. However, a significant proportion of mobile phones in Morocco are run through
prepaid cards (95 percent) rather than through regular subscriptions (only 5 percent),
which might be detrimental for growth potential in the medium and long-run. In
12
World Development Indicators (2004)

6
addition, as indicated earlier, the upsurge in the mobile demand has been achieved at the
expense of the mainline network. This cannibalisation of the market the mobile demand
seems to be hampering internet development.

However, other factors contribute to the weakness of internet demand in Morocco. The
illiteracy rate among adults in Morocco is one of the highest in the region and stands at
48 percent in 2004. The number of personal computers per 100 people is also very low.
It did not exceed 2.36 in 2002 compared to 4.54 for middle income countries, 3.82 in
MENA region13. The estimates provided by the National Regulatory Agency (ANRT)
for 2004 indicate that 12 percent of households are equipped with personal computers14.
So far, the cost of access and the lack of competition in fixed telephony also lie behind
the low internet penetration rate in Morocco.

Due to the attractive commercial offers by Maroc Telecom, the number of subscribers
has almost doubled over the first nine months of 2005 increasing from 113 170 to 206
452. Although the number of internet users is much higher as the number of cybercafés
is growing, Morocco still compares unfavourably to both middle income countries, and
the MENA region. The expected entry of new operators on the fixed telephony market
is expected to foster competition and boost household as well as corporate demand for
internet services.

2. The regulatory framework analysis

Telecommunication sector reform in Morocco is a relatively recent process that
effectively started with the adoption of the new telecommunication law in 1997 (Law
24-96 on Postal and Telecommunications Services). The Law 24-96 admits the
principle of competition in all branches of the telecommunications market. The Law
governs interconnection of various operators’ networks and lays down the criteria and
perquisites for telecommunication services’ supply. The law 24-96 has been recently
(November 2004) amended and completed by the adoption of the Law 55-01. The new
law offers the legal means to effectively address new issues in telecommunication
industry in a liberalized market.

The rest of this section analyzes the provisions of the regulatory framework governing
telecommunication sector in Morocco. It focuses on the prerogatives granted to the
national regulatory agency (ANRT), the legal regime under which each
telecommunication activity can be undertaken. The section deals with other issues, very
critical and highly sensitive in a newly liberalized market, such as interconnection, price
regulation, frequency allocation and universal service15.

13
World Development Indicators (2004)
14
With an average of 5 people per household, this figure is equivalent to 2.4 computers per 100 people.
There is almost no change in comparison with the figure provided by the World Bank for 2002.
15
On the basis of the law 24-96 as amended and complemented by the law 55-01

7
2.1.Telecommunication Regulatory Agency

The National Telecommunication Regulatory Agency (ANRT) is a publicly-owned

entity endowed with legal independence and financial autonomy. It holds broad legal,
technical and economic regulation powers adapted to the new requirements of a rapidly
evolving sector which is highly strategic both nationally and internationally. The ANRT
has been invested with wide authority for regulation, oversight and supervision,
enforcement, and monitoring development of telecommunication sector. It is involved
in all technical, economic and legal aspects of telecommunication operations and
provided with legal means ranging from information request to ordering of injunctions
and penalties.

In the legal sphere, ANRT is entrusted with the drafting laws, decrees an other legal
texts regulating the telecommunication sector, preparing draft legislation with respect
to the legal regimes governing operators’ activities, preparing and keeping up to date the
terms of reference setting out the rights and obligations of network operators,
establishing the procedure for submitting interconnection disputes, designing rules
governing the management and oversight of the radio frequency spectrum, issuing its
opinion with respect to applications for the awarding of licenses, receiving declarations
that are filed, expressing the intent to offer value-added services on a commercial basis,
setting the conditions for undertaking investigations, Issuing authorizations to establish
and operate independent networks. ANRT is also in charge of establishing the
interconnection terms and conditions on a case-by-case basis.

Regarding its technical regulatory powers, ANRT is in charge of establishing the

technical and administrative specifications for the acceptance of terminal equipment;
granting certifications for manufacturing, importing, offering for sale and distribution of
terminal equipment, and for its connection to a public telecommunication network;
certifying telecommunication equipment testing and measurement laboratories which
may be authorized to issue permits; establishing categories and technical conditions
with respect to the use of radio networks and installations consisting of low-power and
low-range equipment.

Regarding its economic regulatory powers, ANRT is in charge of proposing the tariff
ceiling that can be charged for universal service; establishing licensing fees and other
fees relating to attribution and renewal of licenses with respect to radio frequency
assignments. ANRT is also in charge of developing a legal framework with a view to
ensuring that free competition and the principle of equal treatment prevail, and to
protect providers and as well as users from anti-competitive or discriminatory practices.
ANRT ensures that all users receive equal treatment.

The law on telecommunication also specifies the responsibilities of ANRT and its
powers regarding the security of communications, the confidentiality of information,
and ensures that the needs of national defense and public security are met, that operators
support regional and national development, and environmental protection, and they
contribute in funding universal service objectives.

8
The national regulatory agency has been provided with effective powers for
investigating operators’ compliance with laws and regulations in force and terms of
licenses, authorizations and approvals granted in the telecommunication sector. It is also
responsible for assuring compliance with provisions governing interconnection and
those relating to dispute settlement.

<Insert table 3>

The ANRT power of investigation is exercised through inquiries, including on-site

inspections and the requesting of any necessary information or documents that will
enable the Agency to examine operators' compliance with their obligations and terms of
reference.

The enforcement and penalty power is the strongest weapon with which ANRT is
endowed to prevent anti-competitive practices by network operators. The law (55-01)
has set various financial penalties depending on the type of violation committed.

- Operators not respecting to supply ANRT with the information required by the
regulation in force regarding analytical accounting and the accounts audit,
information regarding universal services, information on research and training,
information on the general directory of subscribers, or on tariff offers are liable to a
penalty of a maximum of one hundred thousand Moroccan dirham (DH 100 000).

- Operators and telecom services suppliers not respecting to supply ANRT with the
information regarding the use of radio frequencies and the equipment of
telecommunications, or deadlines to supply ANRT with the information required by
the regulation in force or by the latter are liable to a penalty of a maximum of fifty
thousand Moroccan dirham (DH 50 000).

- Operators and telecom services suppliers not respecting to supply ANRT with the
information regarding other issues (not list above) are liable to penalties of a
maximum of twenty thousand Moroccan dirham (DH 20 000).

If the holder of public telecom networks license fails to respect legal and regulatory
texts provisions or his specifications document, and fails to conform to the formal
notice addressed to him by the director of ANRT, he becomes liable to a warning that
can be published in the official bulletin, to a total or partial suspension of the license for
a maximum of 30 days, and/ or a fine of a maximum of 1% of the previous year’s
turnover exclusive of tax and net of the interconnection expenses.

The management and administrative bodies of the ANRT are structured into three
entities: the board of directors (BD), the management board (MB) and general director
(GD).

The BD consists, in addition to its president, of the representatives of the State and
individuals from public and private sector appointed by decree for one five year period

9
for their technical, legal and economic skills in the field of information and
communication technologies (ICT). The BD deliberates on the general focus of the
ANRT and decides on its annual activity program, it examines the ANRT’s
management reports and meets as often as circumstances require but at least twice a
year (before 31 May, to approve the financial statements for fiscal year-end, and before
31 October, to adopt the budget for the following fiscal year).

The MB assists the BD which deliberates on issues delegated by the BD. The MB is in
particular in charge of settling disputes regarding interconnection. The members of the
MB are appointed by the BD for a single five year renewable term.

The GD, appointed by the King by royal decree, holds all the powers necessary to
manage the ANRT. The DG participates, in an advisory role, in the meetings of the BD
and MB during which it assumes the role of reporter.

In order to enhance its transparency and accountability, ANRT establishes at the end of
each fiscal year an annual report on its activities. This report is sent to the Prime
Minister, and published in the Official bulletin. It allows making activities of the ANRT
public and ensures that regulatory functions are performed transparently.

The power and credibility of ANRT have been put to test over the last few years over
settling disputes on interconnection fees, and through license allocation. The decisions
made by ANRT show both its independence and effectiveness in regulating the market
and handling telecommunication related affairs.

2.2.Legal regimes in telecommunication sector

Different legal regimes are in place in the telecommunication sector (under the law 24-
96 promulgated in 1997 and the law 55-01 officially issued in November 2004)
depending on the nature of services provided.

The licensing regime applies to public telecommunication networks that make use of
the public domain or the radio frequency spectrum. The License is granted by
government decree to any legal entity selected in a call for tender. The legal entity
selected in a bid has to comply with the general principles of operating public telecom
networks as well as with specific provisions stipulated in the call for tender. These
provisions relate to the establishment of the network, provision of the service, coverage
area for the service, radio frequencies and blocks of numbers assigned, as well as
conditions with respect to access to high points that are in the public domain. There are
also minimum requirements as to professional and technical qualifications, and financial
guarantees imposed to applicants. The call for proposals specifies access conditions to
and interconnection with public telecommunication networks, and can also, specify the
terms and conditions for leasing any components of those networks.

The authorization regime applies to independent networks that may be established and
operated by any individual or legal entity. The authorization is granted by the ANRT. It

10
can be issued only if such networks don’t interfere with the technical operation of
existing networks.

The approval regime applies to terminal equipment that are intended to be connected to
a public telecommunication network to radio facilities whether or not connected to
public network, and to laboratories for the testing and measurement of telecom
equipment. The approval is issued by the ANRT or by a test and measurement
laboratory.

The declaration regime applies to value-added services, fixed by regulation. These

services may be freely provided by any individual or legal entity after having submitted
a declaration to the ANRT. The latter notifies within two months, eventually, its
opposition if it appears that service offered undermines safety, public order or is
contrary to morality and common values.

Any supply of telecommunications services is subjected to commercial presence. Thus

any foreign company wishing to provide telecommunication services or infrastructure
must establish its subsidiary in Morocco.

License-holders are bound by various obligations among which: fair competition,

obligation to keep independent financial accounts for each network and service
operated, confidentiality and neutrality of service with respect to the messages
transmitted, requirements in connection with national defense and public security,
conditions with respect to providing the information required for an annual directory of
subscribers, and obligation to comply with international agreements ratified by
Morocco.

Internet access providers are not qualified as telecom operators. They are not subject to
the licensing regime, but simply must file a declaration with ANRT. However, this does
not rule out that they are subject to the general obligations set in Law 24-96 and 55-01
in addition to the terms of their declaration. The declaration sets out the terms and
conditions under which services are to be provided.

The Internet access service must, under a leasing agreement, use the linkage facilities of
one or more of the existing public telecommunication networks unless the Internet
access provider holds a license itself and wishes to use the linkage facilities of the
network covered by that license.

2.3.Mechanism of licenses allocation

The awarding of the second GSM license represented a significant success for the
ANRT. It is worthwhile to examine the procedure in detail.

ANRT initiated the process for awarding a second license for the establishment and
operation of a mobile public telephone network according to the GSM standard. In
1998, a GSM-2 Project Team was set up within ANRT, and an invitation for
expressions of interest was issued. The procedure was completed in 1999 when the
license was awarded. The steps whereby the process was carried through to its

11
conclusion were as follows: establishment of a specific organizational unit to administer
the project, issuing of an invitation for expressions of interest16, selection of a bank to
advise on the procedure, pre-qualification process, finalization of the terms of reference,
issuing of the call for bids, and the publication of the notice ranking the bids.

The key provisions set forth in the terms of reference cover the following areas: the
duration of the license, which was fixed at 15 years, terms and conditions for the
establishment and operation of the network, the possibility of the successful bidder
constructing its own transmission network, authorization to provide subscribers with
direct international access from 1 January 2002, a period of exclusive operation of four
years, mechanisms for contributing towards the general objectives of the State,
mechanisms for paying financial counterpart funds and various fees, itemization of the
various responsibilities of the successful bidder.

2.4.Frequency allocation

The frequency spectrum in Morocco forms part of the State’s public domain and ANRT
is responsible for allocating frequencies to the various users (ITU (2001)). It is also in
charge of enforcing restrictions with regard to any encoding of information exchanged,
spectrum planning, and coordination at the international level. ANRT has already
allocated frequencies for independent radio networks, public entities, government
ministries, diplomatic missions, security agencies, and operators of public
telecommunication networks, (Médi Telecom, Maroc Telecom).

2.5.Price regulation

In the initial phases of the reform process, competition is not fully developed and an
asymmetry exists between the incumbent operator and new entrants (ITU (2001)).
ANRT has been particularly concerned about abuse of a dominant position in the
marketplace and predatory pricing for mobile and Internet services. The Agency
regularly reviews changes in the tariffs charged and particularly when they relate to
access to universal service.

2.6.Universal service17

The concept of universal service was first introduced in the Law 24-96, which defines it
as “making available to everyone of a minimum service consisting of a telephone
service of specified quality at an affordable price, the connection of emergency calls,
the provision of an information service and a directory of subscribers, either in printed
or in electronic form, and the provision throughout the country of telephone booths
installed in public places, all in keeping with the principles of equality, continuity,
universality and flexibility”.

16
15 international operators had made submissions: Deutsche Telecom, France Télécom, GTE, CGSAT,
Telecel, SBC, Stet, Telecom Portugal, Telefónica, Telia, MTN, Rumeli, Investcom Holding, TIM and
Vodafone.
17
On the basis of ITU (2001), “Effective Regulation, Case study: Morocco”

12
Under Article 40, the incumbent (Maroc Telecom) is charged with providing universal
service together with other operators. The cost of universal service, however, is shared
amongst all telecommunication operators. All operators of public networks are required
to make a contribution towards universal service equivalent to 2 percent of their
turnover net of taxes and interconnection fees. A special fund devoted to Universal
Service was created by the financial law of 2005 and managed by the regulatory agency.

2.7.Interconnection

The concept of interconnection refers mainly to two types of services. First, reciprocal
services offered by operators of networks that are open to the public, which allow all
users to communicate freely with one another, regardless of the network to which they
are attached or the services they use. Second, services offered by the operator of a
network that is open to the public to a provider of telephone service that is open to the
public.

ANRT has broad responsibilities regarding technical regulation of interconnection. In

particular, it is in charge of approving technical and tariff quotations offered by
operators, revising interconnection agreements whenever necessary, settling disputes in
regard to interconnection. Dominant operators are compelled to maintain separate
accounts for their interconnection activities as to ensure transparency and avoid
discriminatory treatment among various operators.

3. Assessment of barriers to trade in the telecommunication sector

in Morocco
It has been emphasized (Achy & Hassani 2005) that measurement of barriers to trade in
services is very challenging and much more complex than the case of trade in goods.
Yet, measurement of trade in services is very crucial to policy makers in their bilateral,
regional and multilateral negotiations. The main objective of this section is to provide a
first assessment on the potential impact of regulating the telecommunication sector in
Morocco along the European Union lines. The basic assumption that lies behind this
exercise is that by removing barriers to trade, liberalization will increase competition in
the domestic market, and reduce the price of telecommunications services. This first
order effect of liberalization is expected to make consumers better off by improving
their surplus. In addition, since telecommunications services are inputs for other
activities, any reduction of their cost will improve competitiveness and generate wider
economic effects. Hence to study welfare effects of adopting the EU regulation in the
area of telecommunications; we shall consider not only the effect on consumer surplus
due to the change in price of telecommunications but also those effects owed to changes
in the price of other commodities.

13
3.1 Literature review

Various methodologies have been used to quantify barriers to trade in services:

frequency indexes based either on actual restrictions or commitments scheduled by
countries under GATS, quantity-based measures and price-based measures.

GATS schedules provide information on measures affecting services trade as related to

market access and national treatment both by service sector and by mode of service
supply. It is then possible to identify barriers to commercial presence or foreign direct
investment (mode 3) as well as those restraining cross-border supply of telecom
services (mode 1). However, the information contained in the GATS schedules suffers
from various limitations. First, commitments contained in the national schedules do not
include any information on services which have been left unbound or which have not
been included in the schedules18. Information in the national schedules reports only
commitments and does not reliably reflect the actual restrictions. Third, it is very
difficult to assess and compare the relative restrictiveness of measures contained in
GATS schedules among sectors or countries.

The quantity-based methodology makes use of penetration models to estimate the

quantity wedge existing between actual and consumption volumes in fully liberalized
environment. The price-impact approach follows a similar approach in order to estimate
the price wedge existing between the actual price of a service and the hypothetical price
of the service once all restrictions have been removed (Deardorff and Stern (2004)).

For the specific case of telecommunications, Warren (2000a) used a 1997 survey by the
International Telecommunications Union (ITU) to construct a set of policy indexes for
136 countries taking into account actual market structure and performance indicators.
The indexes have been constructed to incorporate the limitations on market access (MA)
and national treatment (NT) for two modes of supply, cross-border trade and foreign
direct investment.

Entry barriers impede either cross-border trade or limit FDI in telecommunications.

Technological changes are rendering the first category of barriers less and less effective
and it becomes virtually impossible to limit access of residents to foreign
telecommunication services directly through international calls. However, foreign firms
aiming at supplying cross-border services may not be allowed to operate from their
home country and be required to have a physical presence in the market. Regarding
impediments to FDI, foreign capital may be limited by legislation, administrative decree
or terms of concession. Entry of foreign telecom providers may also be prevented by
asking them to construct and operate their own networks instead of leasing existing
networks.

An important constraint on operations arises from the lack of effective regulation that
guarantees fair network interconnection. Usually, the national network is controlled by a
dominant carrier, which also competes with new entrants (domestic and foreign) in the
final product market. Another constraint is the existence of non-transparent and
18
Unbound services are assumed to be fully restricted, but this may not actually be the case.

14
discriminatory standards. Incompatibility of telecommunication systems can represent a
substantial extra-cost for foreign suppliers and may force them to adopt incumbent
standards in order to connect to the local network (Warren (2000a)).

In order to assess the economic impact of these restrictions, Warren (2000b) uses
penetration models to quantify the impact of limits on competition upon fixed network
services and mobile telephony consumption using a sample of 20 countries.
Restrictions on competition are accounted for through a simple count of the number of
operators (fixed and mobile) and by the inclusion of the indexes described earlier
(Warren (2000a)). The policy variables used are based on data for 1997. Warren
shows that liberal policies increase both fixed and mobile network penetration. The
results are used to estimate the quantity impact of barriers to trade in each country of the
sample. Tariff- equivalent can be then deduced from these quantity-impact measures.
Warren concludes that the major beneficiaries are primarily developing countries, where
significant increases in penetration are expected if more liberal policies were adopted.

Trewin (2000) applies a price-based methodology to estimate the price-wedge arising

from restrictions to trade in telecommunications services. Tariff equivalents are
deduced from a decomposition of the price wedge. Prices of telecommunications
services are estimated using output and input measures, as well as others related to
policies and quality of services. Using a time series of ITU-based data over the period
1982-1992 on 37 countries, Trewin shows that telecom services in high income
countries appear to be more capital-intensive and dynamic than low-income countries,
in which these services are costly, labor-intensive and static. Trewin suggests that these
last aspects could be reflecting policies in terms of pricing, labor arrangements and
competition.

3.2. Computation of restrictiveness index for Morocco

Our objective in this research is to measure the degree of restrictiveness to trade and
FDI in the telecommunication sector in Morocco.

Restrictiveness indexes computed by Warren (2000a) are based on a 1997 survey by the
International Telecommunications Union (ITU). Table 3 reports these indexes for a
subset of countries. It reveals that the degree of restrictions to trade in
telecommunications services for Morocco is extremely high. The index takes the value
0.9 compared to 0.9333 for Tunisia, 0.7987 for Turkey and 0.6333 for Egypt.

<Insert table 4>

Considering 1997 as the base case, the expected price reduction in telecommunications
services in case Morocco fully liberalizes its market is remarkably high as it amounts to
1000 percent according to Warren’s computations.

15
 <Insert table 5>

However, given the dramatic changes recorded in telecommunication landscape in

Morocco over the last few years, it would not be relevant to consider 1997 as the base
case for assessing the welfare effects. The telecommunication law was passed in 1997
and then completed in 2004; the independent regulatory agency was created in 1998; the
second GSM license was attributed in 1999 and value added services were fully
liberalized; the incumbent was partially privatized in 2001 and effectively controlled by
a foreign shareholder (Vivendi Universal) since 2004; a second license of fixed
telephone services was attributed in July 2005 covering a local loop network, an inter-
urban network, and an international network; and finally a third license for offering
fixed line phone services within a 35km area was granted in November 2005.
Operations under both licenses are expected to start in 2006.

To account for these changes, we computed updated restrictiveness indexes for

telecommunications services in Morocco based on a methodology similar to that of the
Australian Productivity Commission developed by McGuire and Schuele (2000) for
banking services and Warren (2000a) for telecommunications services. Following
Boylaud and Nicoletti (2000), who pointed out that telecommunications services are
heterogeneous, we consider that it may not be appropriate to compute a single index to
account for regulatory and policy environments in the whole telecommunication sector.
Therefore, three restrictiveness indexes have been computed covering the three main
activities (fixed lines, mobile and value added services). The same exercise has been
done by Boughzala (2005) for the telecommunication sector in Tunisia.

The three steps methodology more comprehensively described in (Achy & Hassani
2005) has been applied. In the first step, all potential restrictions are listed and classified
into categories. Weights are assigned to them respectively depending on their
importance. These weights indicate how significantly each category of restrictions
would limit service suppliers from competing in the market. In the second step, a score
is assigned to each category based on available data, surveys and interviews. The
assigned scores range from 0 (absence of restrictions) to 1 (high degree of
restrictiveness). For each category, the restrictiveness index component is obtained by
multiplying the assigned score by its corresponding weight. Finally, the restrictiveness
index is calculated by summing up the various components.

It should be noticed that the scores reflect not only the state of regulations but also the
perception of their effective implementation. For instance, the market for fixed
telephony is still under monopole in 2005, but the attribution of the second and the third
license is already felt on the market (market contestability). This anticipated entry of
new competitors pushed Maroc Telecom, the incumbent operator, to start behaving as if
it were already in 2004 and 2005 under some degree of competition.

On the basis of our computation, restrictiveness indexes for fixed telephony, mobile
telephony and internet services in Morocco in 2005 are respectively 0.34, 0.21 and 0.26.
These figures lead to an overall restrictiveness index, obtained as simple arithmetic
average, of 0.267. As the three activities are not of the same importance, an adjusted

16
index has been computed by weighting each activity by its corresponding share of the
total turnover in telecommunication sector in 2004. The overall restrictiveness index on
the basis of this alternative computation is 0.278, which is not significantly different
compared to the unadjusted index.

The Restrictiveness index computed by Warren on the basis of 1997 data was much
higher than ours because all liberalization reforms in telecommunication sector in
Morocco have been implemented after 1997, as has been extensively presented earlier.

However, the degree of restrictiveness in telecommunications services in Morocco is

still higher when compared to the European countries. According to Warren (2000a),
restrictiveness indexes in 1997 for Finland and UK were (0.00), Netherlands and
Denmark (0.03), Germany (0.05), Austria (0.13), Italy (0.14), Luxembourg (0.17),
Belgium (0.20), and France (0.21). Since 1997, the European Commission has adopted
several directives to ensure that telecommunications markets are open and fully
competitive (Akdemir et al. (2005) for a review of the regulatory framework in the
European Union). Therefore, adopting the “acquis communautaire” would mean
removing all the remaining restrictions.

3.2. Tariff equivalent of impediments to trade in telecommunication sector

The tariff equivalent is the additional price paid by consumers due to the existence of
various restrictions. Theoretically, the presence of restrictions affects access, quality and
price. Under liberalization and full competition, telecommunications services would be
accessible to a wider range of customers; of a better quality, and cheaper than under
restrictions. The focus of this paper is on price-based measure of the impact of
liberalizing telecommunications services. The two other components are also highly
important, particularly when access to fixed telephony and internet services are
extremely limited. However, these dynamic components require more data and specific
approaches to assess their potential effects.

The tariff-equivalent approach derives estimates of barriers to trade from the difference
between current prices and prices that would prevail once all restrictions were
abolished.

By extending the findings of Warren (2000a) in converting the overall restrictiveness

index for telecommunications services in Morocco, estimated to (0.278), we obtain a
tariff-equivalent of (32 percent). In other words, the extent of existing restrictions
increases the price of telecommunications services by 32 percent compared to what
would prevail under full liberalization. Our calculation also indicates that the magnitude
of the tariff equivalent amounts to 40.5 percent for the fixed telephony, 29.7 percent for
internet services, and only 23.4 percent in the mobile telephony. These results provide
evidence that full liberalization of telecommunications services would benefit users
particularly in fixed telephony and internet services. The expected price reduction for
mobile services is relatively lower but still significant in absolute terms.

17
4. Welfare effects of fully liberalizing telecommunications services
The objective of this research is not only to quantify the magnitude of barriers to trade
in the telecommunication sector, but also to provide an assessment of the impact of
these barriers on the rest of the economy. The same exercise has already been done in
the area of removing barriers on goods using econometric, as well as partial and general
equilibrium methodologies. The relevance of this assessment arises from the need to
understand how the removal of barriers to trade in such services will affect conditions of
competition, productivity, allocation of resources, and economic welfare within and
between sectors and countries (Deardorff and Stern 2004).

On the basis of our previous calculations, the adoption of the “acquis communautaire”
in the telecommunication sector would result in a 32 percent decrease in the price of
telecommunications services, which would make consumers better-off by increasing
their surplus. But since telecommunications services are inputs used by almost all
activities in their processes of production and distribution of other goods and services, it
is expected that prices in these activities would also decrease, which would further
increase consumers’ surplus.

In order to assess the total effect a 32 percent decrease in the price of

telecommunications services on the economy, the 1998 Input-Output table of the
Moroccan economy has been used19. By using this table, we assume that there are no
significant changes in the structure of the Moroccan economy over the period 1998-
2005. We suppose in particular that the telecommunication sector plays more or less the
same role in 2005 compared to 1998. In our view, this assumption is a serious limitation
as it tends to underestimate the remarkable progress in telecommunication sector over
the last few years. The second limitation of the 1998 Input-Output table of the
Moroccan economy is the absence of any distinction between transport and
telecommunications, only one line stands for both20. On the basis on value added data,
the share of telecommunications in “Transport and telecommunications” amounted to
23 percent in 1998 and more than 34 percent in 200221. The third limitation is that
Input-Output methodology only accounts for static effects. Evidence indicates that
dynamic effects are much more important in telecommunications activities.

First, Let A be the 36x36 matrix of input coefficients. On the basis of A; the matrix B is
created form the 35x35 input-output matrix by deleting the 29th column and 29th raw
referring to transport and telecommunications. Denote the 29th raw where the 29th
column element has been deleted by e. Let p be the 1x35 price vector of the 35
commodities excluding transport and telecommunications and v.a the corresponding
1x35 unit gross value added vector. The price equation can be written as:

p = p B + pb e + v.a

19
This is the most recent input-output table available in Morocco.
20
As we overlooked this issue at this stage, our results should be interpreted cautiously.
21
Comptes et Agrégats de la nation (1980-2002)

18
pb denotes the price of the banking services. By rearranging the above equation, we
obtain:

p = pb e (I-B)-1 + v.a (I-B)-1

Once the price of transport and telecommunications that will prevail in Morocco when it
adopts and implements the EU rules and regulations, pb is fixed, we determine the
equilibrium prices of the other 35 remaining commodities from the above equation
assuming that there is no change in the unit gross value added vector v.a.

We denote by π the 1x36 price vector composed by the price vector p and the scalar pb.
π = (p pb), and CON the 36x1 consumption expenditure vector obtained from the 1998
input-output matrix by deleting the value of transport and telecommunications and conb
the value of consumption of transport and telecommunications. Then we form the 36x1
consumption vector as

CON 
CONS =  .
conb 

By construction, all base year prices are equal to unity. Hence, total consumption
expenditure evaluated at base-year prices can be written as:

C = u CONS

where u denotes the 1x36 unit vector. The value of total consumption expenditure
evaluated at the prices that will prevail once Morocco has adopted and implemented the
EU rules and regulations in the telecommunication sector is then given by:

C* = π CONS

The effect on consumer welfare can be calculated as:

(C - C*) x 100 / C*22

As indicated earlier, this measure of welfare effect change focuses exclusively on the
price effect of liberalization. It does not account for any potential increase in consumer
demands for the different commodities following their price reduction. Hence, this
approach provides a downward biased estimate of the welfare effect. Accounting for the
other effects would require the use of price elasticities of demand for the 36
commodities included in the input-output table, which are nor readily available. Thus,
the welfare gain is very likely to be higher that estimates provided in this paper.

On the basis of previous computations, the adoption of the EU rules and regulations in
the telecommunication sector is expected to lead to a reduction of banking services’
price 32 percent. Accordingly, the welfare of the society captured through total
consumption, will improve by 0.1627 percent. Since in 1998 consumption represented
22
Note that this approach determines the equivalent variation in consumer' income.

19
86.12 percent of GDP23, this welfare gain will translate into an increase of 1.4 percent in
GDP.

Since in 2004, GDP amounted to DH 444 billion or the equivalent of US$ 50 billion,
our first and rough approximation of the welfare gain from adopting the EU rules and
regulations in the telecommunication sector is estimated to US$ 700 million. It very
likely that this figure underestimate the total effect of liberalizing telecommunications
services in Morocco.

5. Conclusion
Since 1997, the telecommunication sector in Morocco has embarked in a period of deep
change initiated by technological innovation, liberalization of national markets, and by
partial or full liberalization of incumbent operators.

The purpose of this paper was to present the major developments recorded in
telecommunication sector in Morocco, quantify the extent of the existing restrictions,
and assess the impact of regulating the telecommunication sector in Morocco along the
European Union lines.

So far, the potential impact of liberalizing trade in goods on the Moroccan economy has
received a relatively significant academic attention. In contrast, the potential impact of
liberalizing trade in services in general, and telecommunications services more
specifically, have not received comparable interest. Yet, measurement of trade in
services is very crucial to policy makers in their bilateral, regional and multilateral
negotiations. The potential impact of liberalizing telecommunications services goes
beyond the telecommunication sector itself since these services enter as intermediate
inputs in other activities.

On the basis of our computation, restrictiveness indexes for fixed telephony, mobile
telephony and internet services in Morocco in 2005 are respectively 0.34, 0.21 and 0.26.
These figures lead to an overall restrictiveness index, obtained as simple arithmetic
average, of 0.267. As the three activities are not of the same importance, an adjusted
index has been computed by weighting each activity by its corresponding share of the
total turnover in telecommunication sector in 2004. The overall restrictiveness index on
the basis of this alternative computation is 0.278, which is not significantly different
compared to the unadjusted index. The Restrictiveness index computed by Warren on
the basis of 1997 data was much higher than ours because all liberalization reforms in
telecommunication sector in Morocco have been implemented after 1997.

On the basis of our previous calculations, the adoption of the “acquis communautaire”
in the telecommunication sector would result in a 32 percent decrease in the price of
telecommunications, which would make consumers better-off by increasing their
welfare. Our first and rough approximation of this welfare gain is estimated to US$ 700
million but needs to be taken cautiously due to data paucity. It very likely that this

23
Haut Commissariat au Plan (2003), « Comptes et Agrégats de la nation 1980-2002 »

20
figure underestimate the total effect of liberalizing telecommunications services in
Morocco.

21
References

Achy, L., and J. Milgram (2003), Does a Free Trade Area Favor an Optimum Currency
Area? The Case of Morocco and the European Union, in Achy L. (eds.), Management
du Taux de Change au Maroc, INSEA, Rabat, 15-32.
Agence Nationale de Réglementation des Télécommunications, Rapport d’activité
(2001, 2002, 2003 & 2004).
Boughzala, M. (2005), “Competition in Telecommunication in Tunisia”, Country paper
prepared for Femise project
Boylaud, O. and G. Nicoletti (2000) "Regulation, Market Structure and Performance in
Telecommunications”, Economics Department Working Papers No. 237, Paris: OECD
Chater M. & B. Hamdouch (2001), Impact des Accords de Libre Echange Euro
Méditerranéens: Cas du Maroc, Report for FEMISE, network, www.femise.org.
Chater, M. (2004), “Instauration d’une zone de libre-échange et politique
d’accompagnement: le cas du Maroc”, Région et Développement, n°19, p.83-103, 2004.
Deardorff, A. V. and R. Stern (2004), "Empirical analysis of barriers to international
services transactions and the consequences of liberalization" in the World Bank course
on "Trade in Services and international trade agreements: the development dimension
Erkan Akdemir, Erdem Baºçý and Sübidey Togan (2005), “EU integration and the
telecommunications sector: The case of Turkey”
Haut Commissariat au Plan (2003), "Comptes et Agrégats de la nation 1980-2002",
Rabat, Maroc.
Hoeckman, B. (1995), "Assessing the General Agreement on Trade in Services", in Will
Martin and L. Alan Winters (eds) The Uruguay Round and the Developing Economies,
World Bank Discussion Paper N°. 307. Washington, D.C.
International Telecommunication Union (2001), “Effective regulation: case study:
Morocco”.
International Telecommunication Union (2004), “Shaping the future mobile information
society: The case of Morocco”.
Kingdom of Morocco, Law 24-96 relating to post and telecommunications and Law 55-
01 modifying and completing the law 24-96.
McGuire, G. and M. Schuele (2000) "Restrictiveness of International Trade in Banking
Services", in Impediments to Trade in Services: Measurement and Policy Implications,
ed. by C. Findlay and T. Warren, London: Routledge.
Rosotto C. M., K. Sekkat and A. Varoudakis, "Opening up Telecommunications to
competition and MENA integration in the World economy", Journal of International
Development, forthcoming.
Rutherford T.F., E.E. Rutström, and D. Tarr (1997), “Morocco’s free trade agreement
with the EU: a quantitative assessment”, Economic Modelling, vol. 14, p.237-269,
1997.

22
Trewin, R. (2000), “A Price-impact Measure of Impediments to Trade in
Telecommunications Services”, in C. Findlay and T. Warren (editors), Impediments to
Trade in Services, London and New York: Routledge Studies, chapter 7.
Warren, T. (2000a) "The Identification of Impediments to Trade and Investment in
Telecommunications Services" in Impediments to Trade in Services: Measurement and
Policy Implications, ed. by C. Findlay and T. Warren, London: Routledge.
Warren, T. (2000b) "The Impact on Output of Impediments to Trade and Investment in
Telecommunications Services" in Impediments to Trade in Services: Measurement and
Policy Implications, ed. by C. Findlay and T. Warren, London: Routledge.
World Bank (2004) “World Development Indicators”, Washington, D.C
WTO (2002), “Trade in services: Kingdom of Morocco, Schedule of Specific
Commitments”, GATS/SC/57/Suppl.2/Rev.1

23
 Figure 1

Gradual deregulation agenda of telecommunication sector in Morocco

Stage 1 Stage 2 Stage 3 Stage 4

Restructuring Opening up the sector to Further privatization of

Separation of regulatory competition (not fixed Maroc Telecom and
and operation functions lines) and partial introduction of competition
privatization in fixed line services

1984
Ministry 1997 1999 2004
Maroc Telecom Second GSM license Sale of 14,9% of Maroc
granted to Méditel Telecom via stock
1984 market
Post office and 1997
Telecom board Establishment of 2000
the ANRT Sale of 35% stake in 2005
Maroc Telecom to Attribution of the
1997 Vivendi Universal Second and third
Barid Al license for fixed line
Maghrib services

2005
Vivendi universal
increased its
ownership by
acquiring 16% stake

24
 Table 1
Summary of Morocco's telecommunication sector commitments under the GATS
Mode of supply
Presence of
Cross-border Consumption Commercial
Items natural
supply abroad presence
persons
Market access/National treatment
Telecommunication services
Value-added services (excluding telephone N/N N/N OP/N NBex/NB
and telex)
Electronic mail services N/N N/N OP/N NBex/NB
Telephone answering services N/N N/N OP/N NBex/NB
Direct permanent information N/N N/N OP/N NBex/NB
search services and database servers
Electronic data exchange services N/N N/N OP/N NBex/NB
Improved value added fax N/N N/N OP/N NBex/NB
services, including registration,
retransmission and registration and search
Point-to-point telephone services OP/N N/N OP/NBex NB/NBex
Telex services OP/N N/N OP/NBex NB/NBex
Integrated service data network (ISDN) OP/N N/N OP/NBex NB/NBex
Packet-switched data transmission services OP/N N/N OP/NB NBex/NBe
(TDCP) x
Frame relaying services OP/N N/N OP/NB NBex/NBe
x
Mobile telephone services OP/N N/N OP/N NBex/NBe
x
Paging services OP/N N/N OP/N NBex/NBe
x
PCS systems OP/N N/N OP/N NBex/NBe
x
Mobile data transmission services OP/N N/N OP/N NBex/NBe
x
Private leased circuit services OP/N OP/N N/NB NBex/NBe
x
Source: WTO (2003): “Trade Policy Review, Kingdom of Morocco”, Report by the Secretariat.

N None: Morocco has agreed not to impose any restrictions on this item.
Nex None, except for contrary provisions under horizontal commitments made by Morocco.
NB Not bound: Morocco has not undertaken any commitment on this item.
NBex Not bound, except for contrary provisions under horizontal commitments made by Morocco.
OP Other provisions apply.

25
 Table 2
Telephone Penetration (fixed and Mobile) in Morocco over the period 1997-2005

1997 1998 1999 2000 2001 2002 2003 2004 Sept

2005
Number of subscribers
(1000) 1368 1504 1835 4323 5915 7324 8551 10645 13322
Fixed telephony (000) 1300 1393 1471 1472 1140 1127 1219 1308 1345
GSM (000) 68 111 364 2851 4775 6197 7332 9337 11977
Number of lines (per 100) 5,10 5,40 6,50 15,45 19,62 24,77 28,59 35,61 45,1
inhabitants
Fixed 4,80 5,00 5,20 5,05 3,92 3,86 4,11 4,38 4,5
Mobile 0,30 0,40 1,30 10,40 15,70 20,91 24,48 31,23 40,06

26
 Table 3
Responsibilities of ANRT regarding interconnection
Approval of fixed-to- Approval of fixed-to- Disputes settlement Remarks
fixed interconnection mobile interconnection
tariffs tariffs
Set by ANRT in – Negotiated ANRT has sole Only ANRT has the
advance responsibility in the power to set
– Referred to ANRT settlement of disputes. interconnection
in case of This function is charges and serve as an
disagreement performed by the arbitrator
management committee
Source: Effective regulation, Case Study: Morocco (2001)

27
 Appendix 1
Key information on telecommunication sector in Morocco
Item Situation in Morocco
Ownership of the incumbent Maroc Telecom
The government of Morocco (34%), Vivendi
Universal (51%), Shareholders through the stock
market (14,5%), Employees (0,5%)
Ownership of other telecom operators Médi Telecom (awarded the second GSM license in
1999 and won the second fixed phone license in July
2005)
Portugal Telecom (30,5%), Telefonica (from Spain)
(30,5%), BMCE Bank (20%), Group Afriquia (11%)
and CDG (8%)
Degree of ownership allowed No limit on foreign ownership. Under GATS,
Morocco reserved the right to limit the proportion of
foreign ownership but the level has not yet been
specified.
Degree of market liberalization Opening up of telecommunication services to
competition: mobile telephony since 1999 and other
licenses may awarded through public tender,
GMPCS open to competition in 1999, VSAT in
2000. Full liberalization of value-added services
(radio messaging, internet access and service
providers (ISPs). Access to market is also open for
packet-switched data transmission and frame relay.
Fixed telephony (local, long distance and
international) has been a monopoly of Maroc
Telecom until recently (July 2005).
Leased line and resale More than 6200 leased lines in 2003
Callback Callback services are allowed

28
 Appendix 2
Methodology for constructing restrictiveness indexes in telecommunication sector

Policy Index Content

Market access/Trade Captures policies that discriminate against all potential entrants (domestic and
foreign) seeking to supply cross-border telecom services. It is based on data on
(MA/trade)
leased lines and resale.
MA/Investment (fixed) Captures policies that discriminate against all potential entrants (domestic and
foreign) seeking to supply fixed network services via investment in the country
MA/INV (fixed)
at issue. The index is a weighted average of three questions:
– Does competition operate in the market for fixed services? (the number of
competitors)
– Does policy allow for competition in the market for fixed services? (local,
long distance domestic, international, data and leased lines). Full
competition (0), Partial competition (0,5), monopoly situation (1).
– Is the incumbent privatized? The inverse of the fraction of the incumbent
that is privatized (0.0-1.0).
MA/Investment (mobile) Captures policies that discriminate against all potential entrants (domestic and
foreign) seeking to supply cellular mobile services via investment in the country
MA/INV (mobile)
at issue. The index is constructed in much the same way as MA/INV (fixed).
National Treatment/Trade Captures policies that discriminate against potential foreign entrants seeking to
supply cross-border telecommunications services. It is constructed from the ITU
NT/Trade
data on individual country policy relating to callback services.
National Treatment Captures policies that discriminate against potential foreign entrants seeking to
/Investment supply fixed or mobile telecommunications services via investment in the
country at issue. It is constructed on the basis of ITU data on individual country
NT/INV
policies. The index is based on the percentage of foreign investment allowed in
competitive carriers.
Source: Warren (2000)

29
 Table 3
Restrictiveness Index score for Telecommunications Services
ment Restrictions on ongoing Restrictions on establishment Restrictions
operations on ongoing
operations
estrictions on Restrictions Restrictions on Domestic Restrictions Restrictions Restrictions on Restrictions Foreign index
stablishment on cross- ongoing index total on direct on cross-border on ongoing total
total border trade operations investment in establishment trade operations
total fixed and total total
mobile
network
MA/INV services
MA/Trade
NT/FDI NT/Trade
0,3333 0,1667 0,1667 0,5000 0,5333 0,5333 0,3667 0,3667 0,9000
0,2333 0,2000 0,2000 0,4333 0,2333 0,2333 0,4000 0,4000 0,6333
0,0000 0,0000 0,0000 0,0000 0,0000 0,0000 0,0000 0,0000 0,0000
0,0500 0,0000 0,0000 0,0500 0,2100 0,2100 0,0000 0,0000 0,2100
0,0493 0,0000 0,0000 0,0493 0,0493 0,0493 0,0000 0,0000 0,0493
0,1867 0,2000 0,2000 0,3867 0,2887 0,2887 0,4000 0,4000 0,6887
0,1567 0,1333 0,1333 0,2900 0,1967 0,1967 0,3333 0,3333 0,5300
0,0436 0,0000 0,0000 0,0436 0,0436 0,0436 0,0000 0,0000 0,0436
0,3333 0,2000 0,2000 0,5333 0,5333 0,5333 0,4000 0,4000 0,9333
0,2667 0,2000 0,2000 0,4667 0,3987 0,3987 0,4000 0,4000 0,7987
0 to 1. The higher the score, the greater are the restrictions for an economy.

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