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Licensing of Telecom Services by Pakistan Telecommunication Authority Last Updated (Friday, 20 May 2005)

 

In line with global trends, the promulgation of the Pakistan Telecommunication Reorganization Act 1996 laid the foundations of reforms in the telecommunication sector. The establishment of the Pakistan Telecommunication Authority (PTA) under the Telecom Act was a further step forward in the direction of separating policy, regulations and operations. This arrangement facilitated private sector investments in mobile and value added services whereas in basic telephony services the Pakistan Telecommunication Company (PTCL) a public sector owned company was granted exclusivity for a period of seven years under the Act. Under the prevailing circumstances the said arrangement assisted growth in all segments of the telecommunication market in the country.

Rapid development of Information and Communication Technology (ICT) infrastructure is a prerequisite for making progress in every segment of the economy. Modernization and development of telecom infrastructure has been correlated to increased economic activity as enunciated in various studies/surveys carried out by independent observer groups, analysts and international institutions.           

PTA continuously analyzes the global regulatory environment and modifies its regulations and licensing mechanism to accommodate new telecom services in Pakistan. In view of the liberal approach adopted by PTA substantial reduction was made in royalty fee, CPP regime was introduced for cellular mobile industry and type approval procedure were simplified.

 

Currently Pakistan telecommunication industry is passing through a crucial phase of deregulating basic telephone services. The exclusivity of PTCL for provision of basic telephony has already ended with the pronouncement of the Telecom Deregulation Policy (TDP)   on 13th July, 2003. This new telecom policy has been envisaged with a vision for a smooth transition from regulated telecom sector to deregulated scenario by introducing competition in both local and long distance telecommunication services.  PTA being the regulator has the responsibility of implementing the telecom deregulation policy.

 

Basic Telephony 

 

PTCL was the sole operator to provide basic telephony in Pakistan on commercial basis excluding northern areas where SCO has been entrusted the task of providing telecommunication services. This made PTCL the only owner of international gateway, domestic and local fixed line infrastructure.

Recently, PTA has been actively engaged in completion of the Phase-I of the Telecom Deregulation policy.  This included licensing of new entrants in the Telecom sector of Pakistan.

Salient features are detailed as under:

 

        Fixed Line Telephony Licensing as per the policy is divided as follows:

        a.   Local Loop

i.       Fixed Local Loop

ii.      Wireless Local Loop

        b.    Long Distance International

 

PTA had received 95 applications for Local Loop (LL) and Long Distance International (LDI) licenses till 2nd June,

2004 the extended date for submission of applications. The breakdown of applications received is as under:

a.      LDI                              23       

b.      LL                               72       

     Total                              95

 

Out of 72 LL applicants, 12 Companies had applied for all 14 Telecom regions, 38 companies applied for single LL regions whereas, remaining 22 Companies, had applied for different regions.

 

In this regard two separate committees for LL and LDI were constituted to scrutinize and short list applications. The evaluation based on technical and financial viability of the applicants as already provided in the Information Memorandum (IM) was completed successfully.

 

Both the licenses are technology neutral. Local Loop licensed services can be offered through wire-line and wireless media. PTA provided the spectrum availability in the Information Memorandum (IM) for (Wireless Local Loop) WLL applications and Spectrum allocation process has been completed through auction in fair and transparent manner. The fairness and transparency of this process has been recognized by the print media throughout the country and well acknowledged by the stake holders as well. In this regard the detail of spectrum made available is reflected here under:

Table - 1

 

Available Spectrum for WLL

Band

Blocks available

No of operators

1.9 GHz

Three blocks of 5 MHz each

Three Operators

*450 MHz

2/3 Carriers

One or Two Operators

479 MHz

One block of 5 MHz

One Operators

3.5 GHz

Seven blocks of 10.5 MHz each

Seven Operators

 

With the award of new licenses for fixed line services, significant amount of investment is expected in addition to increased employment opportunities in the country. Furthermore, the present Tele-density of 2.8 percent of fixed line will grow substantially.

As mentioned earlier seventy-two companies had applied for local loop licenses in 14 Telecom regions, Out of which thirty-nine companies have opted for fixed local loop license and thirty three companies wanted WLL spectrum. Out of these thirty-three, twenty eight companies were cleared for participation in spectrum bidding. Twenty companies have won the spectrum and in all 108 WLL licenses in fourteen regions will be awarded to the successful bidders upon completion of formalities and submission of spectrum winning prices. Total revenue generated from the spectrum bidding is Rs. 14121.56 Million PAK Rupees.            

 

PTA has issued 12 LDI Licenses to various national and multinational companies who deposited Rs. 348.35 million as initial license fee and application fees and fulfilled all other requirements as mentioned in Information Memorandum.  PTA has also issued 76 FLL Licenses to various companies for 14 telecom regions of Pakistan and received Rs 44.6 millions. 

 

Apart from promoting telecom services in Pakistan, PTA is also responsible for providing low cost telecom services to consumers. In this regard domestic as well as international call rates have been slashed between 40 and 60 percent despite PTCL?s stance on increasing both rates. Growing demand on the usage of internet has also made reduction of internet bandwidth rates from US$ 90,000 to astonishing US$ 3,800 per month.      

 

Cellular Mobile Telephony 

 

Two cellular licenses were awarded to M/s Telenor and Warid Telecom @ US$291 Million. 

 

Initially PTA offered licenses to M/s Telenor and another mobile phone company Space Telecom on 24th April 2004. However, the offer for Space Telecom was cancelled after it missed a dead line to make a 50% down payment of the auction winning price.  Thereafter PTA offered next highest bid Winner Company, M/S Warid.

 

It will be not wrong to say that last couple of years has shown tremendous growth in cellular mobile telephony worldwide and Pakistan also followed that trend. This may be was inevitable or PTA might take the credit for introduction of Calling Party Pays (CPP) form June, 2000 as opposed to earlier Mobile Party Pays (MPP) regime.  That credit may not be wrong as mobile subscriber base made an exponential growth after introducing CPP.       

 

However, introduction of CPP regime was not the only factor which led to tremendous growth in cellular mobile subscriber apart from that PTA provided various incentives to the operators that includes reduction in royalty, interconnection and air time charges. The customer base jumped from 0.3 million in June 2000 to 6.1 million by October 2003.

 

Besides providing and facilitating new services PTA also has to safeguard the consumer rights. In this regard PTA continuously monitors Quality of Service (QoS) of all Telecom services and especially cellular mobile telephony. Consequently show cause notices were issued to all mobile operators. M/S Mobilink (Pvt) Ltd being the SMP was penalized to the extent of Rs.60 million after providing full opportunity to defend their case in an open hearing.

 

Another landmark achievement in the cellular industry was awarding of GSM license to SCO to operate cellular mobile telephony service in remote, AJK and Northern Areas.

 

PTA continuously monitors the market trends and accordingly issue determinations for promoting telecom services. In this regard PTA has reduced the royalty payable by the cellular mobile operators under their respective license from 4 to 1.5 percent of gross sales revenue minus PTCL charges and lease line charges.

 

This year also saw a long awaited interconnection arrangement between all the four operators to send and receive SMS from any mobile network. Another landmark achievement by the cellular mobile industry was the introduction of 2.5 G services i.e. GPRS by Ufone. GPRS is packet data service on top of existing GSM infrastructure that provides high data rate to end user.

 

Value Added Services 

 

The telephone coverage in cities and in particularly in the rural areas is still inadequate. Thus creating a need to set up card payphone facilities all over the country for ensuring universal access.

 

The first step in this direction was the installation of card payphone in 1992. The growth was not substantial till 1998 when the PCOs were installed as outdoor booth. Later on card payphone started as franchises as indoor booth. Since then a significant growth was seen in card payphone industry.

 

Apart from that Internet Access is now available in 1800 cities of Pakistan as compared to only 29 in year 2000 which shows an enormous growth in the telecom sector.

 

Director Licensing

 
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