GROWTH OF TELECOM SECTOR IN YEAR 2004

PTA first and utmost responsibility to provide quality telecom services to the customers.

By KHURRAM ALI MEHRAN
Jan 17 - 30, 2005

Landscape of telecommunications is changing fast with the advent of state-of-the-art technologies and rising nations are doing hard to keep themselves abreast of emerging trends in the field of telecommunication. Convergence of technologies has, at a rapid pace, revolutionized every field of human life and so is the case with telecommunications. Pakistan is in no way an exemption to this developing shift. The sector has witnessed enormous advancement with the grant of two licenses to new cellular companies and several other licenses for fixed line services, thus fetching huge foreign and local investment and bringing momentous changes in socio-economic scenario of the country.

Telecom regulator, Pakistan Telecommunication Authority (PTA), through its consistent and well calculated policies has bought about phenomenal progress in this sector and has transformed the country into investors' paradise. As latest figures show, Foreign Direct Investment (FDI) in telecom sector reached US $ 207.1 million in 2004 which was just US $ 6.1 million in 2002. Besides, US $ 5 to 8 billion FDI is expected in the next 3 to 5 years. The influx of this heavy investment was occasioned because of the fact that PTA had issued various telecom licenses during the year 2004 to foreign and local telecom investors by winning over their trust and confidence and creating a healthy competition among telecom operators, as mandated by the Government of Pakistan in the Telecommunication Deregulation Policy 2003.

PTA awarded two new licenses to cellular phone operators i.e. M/s. Telenor and M/s. Warid Telecom through open and transparent bidding which generated revenue to the tune of $ 582 million. Total number of mobile operators in the country will be six when these two companies start their business. Hopefully, these companies will start their operation in the first quarter of 2005.

Cellular companies already operating in the country have significantly reduced their tariffs in view of competitive environment in the offing. These operators also expanded their infrastructure to compete with the newly inducted parties. The government also reduced activation charges from Rs.2000 to Rs.1000 to facilitate the intending customers and boosting growth of cellphone connections. The companies had withdrawn roaming charges throughout the country. Owing to these measures, an increase of 173 percent was manifest in mobile sector and total number of cell phone users reached to 7.9 million by the end of 2004. Existing mobile companies had provided more than 5.5 million new connections during the year. The mobile teledensity has crossed 5.14 percent in Pakistan and according to conservative estimates number of mobile phone users would touch the figure of 15 million by December 2005. Lately, PTA had renewed license of pioneer cellular company of Pakistan, Paktel for next 15 years against $ 291 million and allowed it to launch its GSM operation. With the operation of existing and new companies, the customers would get varied choices and enhanced quality of service at cheaper rates.

Numerous new licenses were also issued to national and multinational companies providing fixed line telecommunication services to end PTCL monopoly in basic telephony during the year 2004. PTA awarded 12 Long Distance & International (LDI) licenses, 76 Fixed Local Loop (FLL) licenses to 34 operators and 90 Wireless Local Loop (WLL) licenses to 15 companies. The process fetched as much as 14 billion plus through auction of spectrum for WLL, and the initial processing fee for award of these licenses. Fixed line telephone tariffs were reduced substantially to give relief to consumers. Charges for new connection in rural and urban areas were decreased by 73% and 44% respectively. Similarly, NWD call charges were reduced by 25% and ISD charges by 24%. Currently, Pakistan has 3.13% teledensity in fixed telephony which was just 2.2 percent in year 2000. With the issuance of fixed line licenses to the new operators, it is hoped that there will be 12 million more customers during the next five years and teledensity will become at par with other Asian countries.

Incentives have also been offered to the investors in view of growing needs of Internet users not only in the big cities but also in remote areas. An ISP, operating countrywide, has now to pay rupees 300,000/ as license fee instead of rupees 500,000/ in the past. For any single PTCL region this fee is merely 100,000/. PTA has so far issued 137 licenses in this fast growing segment of the sector. For value-added services, 621 licenses were granted to different companies over the years.

In order to introduce genuine competition, encourage upcoming cellular and fixed line operators to smoothly enter the market and thwart unscrupulous practices in telecom business, PTA granted three companies the status of Significant Market Power (SMP). The companies included PTCL, Special Communication Organization (SCO) and Pakistan Mobile Communication Ltd (Mobilink). Another milestone on the part of PTA was the reduction of 45 percent interconnection charges by PTCL to facilitate new operators. This decision was widely welcomed by telecom companies.

PTA prioritize as its first and utmost responsibility to provide quality telecom services to the customers. A Complaint Cell is established at PTA Head Quarters to address the grievances of telecom consumers. The cell takes appropriate action on complaints about telecom services. Complaints are immediately forwarded to the concerned operators for their quick resolution. Consumers can send their complaints to PTA by post, through e-mail, fax or toll free number 0800-55055. As many as 5659 complaints were entertained during the year 2003-2004.

If one looks on the rapid growth of telecom sector, it is evident that PTA did a lot in expanding telecom systems and services and providing ample relief to the consumers during last year. The Authority always gave top priority to the consumers in the decision making and regulation formulation process. PTA arranged public forums on various issues concerning operators and consumers to gather their views and opinion on various policies. Consumer-friendly policies were formulated on the basis of conculsions arrived at those forums. Periodical surveys were conducted throughout the country to examine the quality of service of various telecom operators. Necessary remedial steps were also taken if service was not found upto the mark.

It is hoped that as a regulator PTA will spare no efforts in providing conducive environment to the new licensees to launch their operations in the year 2005. Besides, the Authority is expected to facilitate existing telecom companies so that a consumer is directly benefited from the services of new operators. PTA should make concentrated efforts to expand telecom services and network so that the fruit of the era of Information Communication Technology (ICT) are harvested by the common man in every nook and corner of the country. These steps will not only pave way for generating employment opportunities of more than 370,000 but will also make a positive effect on the overall national growth and economy.