GROWING TELECOMMUNICATION SECTOR

The opening of the sector would enhance coverage and provide competitive rates and quality service

By AMANULLAH BASHAR
Feb 02 - 15, 2004

Though the process was slow compared to the rest of the world, yet the telecommunication sector has finally arrived at a point where telephone, either landline or cellular has become everybody's domain.

Growth of the telecommunication sector is reflected in the recent declaration of the cellular sector as an industry and that benefits will start coming in from investment point of view enlarging scope of coordination between various relevant sectors including Information Technology in Pakistan.

Resultantly, an era of competitiveness in telecom sector has started taking roots in various segments of the economy as well as social life of the society. PTCL has adopted numerous measures to keep consumers satisfied and attached with the Company. To retain the corporate customers in the competitive scenario to be emerged after deregulation of the telecom sector, PTCL has focused its marketing and customer care areas. To facilitate corporate consumers who contribute about 70% revenues, PTCL has setup special corporate customer centers in Islamabad, Lahore and Karachi. In order to provide improved infrastructure to the customers, PTCL has initiated a project of optical fiber access (broad-band access). Another project being started by PTCL is billing and customer care to facilitate the total five million customers, adding the residential customers who are 75 per cent of total customers and contribute 30 per cent of revenues, will largely benefit from the project. Under this project, 2800 exchanges of PTCL throughout the country would be inter-linked so as to get on-line information.

It is the growing competition in this sector that the PTCL was forced to reduce its installation charges to the level of Rs500 initially for the rural areas but this would naturally be applicable for the urban centers where the demand for new landline telephone connection was gradually declining due to availability of mobile phone option at much easier terms.

Currently, the call charges studded with government levies are on the higher side. Actually, utility services means facilitation services for the people but unfortunately these utility services are being used as tax collecting agencies in Pakistan. Out of 140 million of population there are 5 million subscribers in Pakistan which speaks about tremendous potential for growth in Pakistan.

The government in principle has agreed to reduce call charges and its official announcement would be made in the forthcoming federal budget in June this year. Earlier, the PTCL had introduced a scheme of fixed charges of Rs500 a month for local calls. This was a wonderful scheme, restoration of that scheme and low installation rate would mean a multiplication of subscribers from existing 5 million to expected 10 million in a short span of time, if the golden principle of low profit and large volume is adopted in this sector.

MOBILE PHONES

The government has recently announced a new policy for cellular phone which declares it as an industry.

Following are the expected benefits of the new policy:

•Additional investment of over $1.5 billion in mobile cellular sector. Additional job creation of 12000-15000 both direct and indirect.

•Coverage to about 300 cities and towns including over 70 percent tehsil headquarters. Coverage to over 50 percent population presently 30 percent of the population has the access to phone.

•Consumer base of about 15 million (3 million to-date).

•Tax revenues increase from Rs3.4 billion to Rs16.9 billion including GST, import duties add corporate tax but excluding activation tax.

•Mobile Tele-density to increase from 2 percent to about 10 percent.

In short, this progressive policy is designed to give boost to the sector and also keeping in mind the future technological developments in the field of mobile cellular communications.

The minister for IT telecommunications, Awais Ahmed Leghari, expressed the hope that policy would attract new investment worth $1.5 billion in the next three-four years and provide between 12000 and 15000 additional jobs.

At present, four mobile phone companies are operating in Pakistan. Most of the operating companies making new investment to expand their coverage. These have the option to adopt the new policy, which allows a number of new incentives.

The new policy, which allows only two new companies in the sector, will be selected through integrated bidding for phone as well as frequency spectrum. The agreement is likely to take place in March.

The objective is to enhance coverage area of telephone facilities in far off corners of the country. For this purpose, it would be obligatory on the new companies to have their operations in 70 percent of tehsil headquarters in the next four years and at least ten percent in tehsils of each province.

The companies will have to give a performance bond of Rs30 million to ensure their compliance with rollout obligations. They will also have to contribute to R&D fund.

The policy becomes operative with immediate effect, however a bill amending the Telecommunication Act will be presented in the Parliament in near future.

The opening of the sector would enhance coverage and provide competitive rates and quality service to the consumers because of the growing competition. The policy also allows the companies direct accessibility to their consumers within own region. This means they will not have to go through PTCL channel.