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PTA Announces Substantial Reduction in Broadband Tariffs Last Updated (Friday, 28 July 2006)

Islamabad:  Pakistan Telecommunication Authority (PTA), in a bid to accelerate the spread of broadband services in Pakistan, has announced substantial reduction in different slabs of international bandwidth tariffs which would have positive impact on internet and broadband subscription.


Decision to this effect was taken in a hearing on international bandwidth tariffs held here today at PTA Headquarters. The final hearing was conducted by the Authority comprising Chairman PTA Major General �® Shahzada Alam Malik, Member Finance Syed Nasrul Karim A Ghaznvi and Member Technical Dr. Mohammad Yasin. It was attended by Senior Management of PTCL, Mr Salman Ansari, Wahaj-Us-Siraj, Convener ISPAK (South), Jamshed Masood of Telecard and representatives of the other telecom operators. The operators presented their recommendations and suggestions for the growth of broadband services. The Authority after considering these recommendations in detail and listening to all stakeholders announced that the bandwidth tariffs of PTCL should be in accordance with the international trends to attract the foreign consumers and to facilitate local subscribers.


Issuing a detailed determination on bandwidth tariffs and broadband issues, the Authority directed PTCL to reduce its tariffs. As for International Private Leased Circuit (IPLC) tariffs effective from July 1, 2006 the E1(2M bps) for ISPs will be US$ 3,000 instead of US$ 3,950 whereas for call centers it would be US$ 2,400 instead of US$ 3,500. Similarly for DS3 (45 M bps) ISPs will pay US$ 39,000 instead of US$ 67,150 and call centers will be charged US$ 31,200 instead of US$ 57,150. STM 1 (155 M bps) price will be US$ 84,000 and 67,200 for ISPs and Call Centers respectively. From January 1, 2007 the tariffs for Voiced Data Services have been merged and will go down further to US$ 2400,  28800 and 67,200 for E1, DS3 & STM1 respectively.


Similarly data & voice services rates of Internet Protocol(IP) have also been reduced significantly. For Data Services IP rates for ISPs and Call Centers will be reduced in two phases. From July 1, 2006 E1 rates will be US$ 1,400 instead of 2,000, DS3 will be 22,400 instead of 31,348 and STM 1 will be 43,400 instead of 76,000. Tariff will be revised from January 1, 2007 and E1 will come to 1,200, DS 3 to 16,800 and STM 1 to 37,200 dollars. Furthermore IP tariffs for Voice Services for Long Distance and International (LDI) operators have also been revised and reduced by 47% to 49% which would be effective from July 1, 2006.


The Authority also reduced the Domestic Private Leased Circuits (DPLC) tariffs for Data Network Operators (DNOP) by 35%. Similarly, DPLC tariffs for voice services have been reduced by 20% to 30%.The site clearance fee for Fixed Wireless Access (FWA) of Rs. 29,000 being charged by PTA is waived off with immediate effect.


The Authority also announced that DSL line rent of Rs.250 being charged by PTCL to other DSL operators is abolished immediately. PTCL has also been asked to review its Standard Operating Procedures (SOPs) for co location to resolve the complaints of broadband service providers. It may be noted that PTA has issued a detailed determination on broadband to facilitate the growth of broadband and related services in the country.


Speaking on the occasion the Chairman PTA said that the industry has been approaching PTA for quite some time requesting the Authority to regulate the bandwidth tariffs.  They have been emphasizing that the tariffs charged by PTCL are abnormally high and thus do not give them any competitive advantage in the International Market.   Moreover, some investors have also contested that the current tariff structure is discouraging them to make investment in Pakistan as it is cheaper to acquire these facilities from other Asian countries.  This entire scenario is hampering the broadband proliferation in Pakistan.


The Chairman PTA said that, keeping in view the importance of the issue, PTA has decided to regulate IPLC and IP tariffs. In this regard, PTCL has been directed to review and rationalize its international bandwidth prices, remove the distortions and submit a comprehensive proposal for all categories of international bandwidth rates, he added.


The Chairman said that PTA also arranged a consultation paper in which a detailed study was carried out for the spread of broadband in the country.  The suggestions and recommendation of the industry were also incorporated to rationalize IPLC/IP tariffs.  A hearing was also conducted on June 06, 2006 to conclude the consultation process.


It may be added that presently there is only one active player i.e. PTCL providing International Bandwidth.  It is offering international bandwidth through SMW-3 (South East Asia Middle East and Western Europe) SMW-4 and Fiber Optic Link around the Globe (FLAG).Effective competition has not yet emerged in the bandwidth business segment.  At present, PTCL being the only provider of bandwidth in Pakistan is likely to maintain its dominance in the market for the next few years.


International Private Leased Circuit (IPLC) that offers global connectivity through submarine cables is a critical input for provision of Broadband and Internet services, International Long Distance Voice Telephony and for a number of key industries like call centers and other information technology services.  The cost of IPLC forms a substantial portion of the total cost of the user industries.  The competitiveness of these industries in the global market to a large extent is dependent on the prices they pay for International Bandwidth.

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