INTERVIEW WITH PTA CHAIRMAN
TELEDENSITY IN PAKISTAN CROSSING 59.81% MARK
PTA STARTS DEREGULATING TELECOM IN AJK, NAS
Nov 03 - 09, 2008
Pakistan Telecommunication Authority is providing huge revenues to government in terms of taxes. In the year, 2007-08 government received over Rs.111.7 billion and in the year 2008-9 it is expected to raise by Rs.120 billion. PTA also advises the government on policy matters and recommends measures, which can help in the sector development.
One of the examples is reduction in activation tax. Previously, the government used to charge Rs. 2,000 as activation on every new connection. On the recommendation of PTA, this tax has now been reduced to Rs. 500 only. This has had a tremendous impact on growth of cellular mobile subscriber base.
PTA Chairman Dr Muhammad Yaseen told PAGE that he has asked the Long Distance International operators to strictly follow the PTA instructions regarding grey traffic, otherwise legal action would be taken against them.
He chaired a meeting to review the progress of establishing International Clearing House and Technical facility to curb illegal traffic. The progress of setting up ICH was also discussed in the meeting. It may be recalled that ICH is being set up as a joint project of PTA and LDI operators for Reconciliation of International Telephonic Traffic (RITT). Once this system is installed, it will ensure factual recording of inbound/outbound traffic and accrues long-term benefits to government in the form of remittances worth millions of dollars. It will also benefit LDI operators.
In an interview, Dr Muhammad Yaseen highlighted his vision about the Authority. Following is details of his interview:
PAGE: What is the present state of telecom sector in Pakistan?
Dr Yaseen: Liberalization Policy and opening of market to new entrants in 2004 has beautified the landscape of Pakistan telecom sector. Under this policy, PTA issued two additional cellular mobile licenses to Telenor and Warid. Besides cellular licenses, 14 Long Distance International (LDI), 92 Wireless Local Loop (WLL), 76 Local Loop (LL) licenses were also issued to different telecom operators in 2004. As a result, Pakistan telecom sector has emerged as one of the fastest growing sector in the region.
This growth can be gauged in terms of teledensity, subscribers and revenue. During the year 2007-8, the cell companies added 2.3 million subscribers on average per month on their networks. WLL subscribers have reached 2.25 million (August 2008). Few years' back, we were behind many regional countries in terms of teledensity. Today teledensity in Pakistan is crossing 59.81% mark. Moreover, the tariffs of the services in Pakistan are one of the lowest in South Asia where consumers can call to USA, UK and other destinations with just Rs.0.99 per minutes.
Apart from consumers' benefit, government is receiving huge revenues in terms of taxes where in the year 2007-8 government received over Rs.111.7 billion and in the year 2008-9 it is expected to raise Rs.120 billion. Telecom sector is one of the largest FDI recipient sectors in the country where about one fourth FDI of total FDI in the country is landing in. Sector has produced large employment opportunities and more than one million families are attached with this sector.
PTA has also started deregulation of the telecom market in Azad Jammu & Kashmir (AJK) and Northern Areas (NAs) which was under the monopoly of incumbent "Special Communication Organization (SCO)". Deregulation will bring this region at par with rest of the country. During the first phase, PTA awarded cellular mobile licenses to Mobilink, Telenor, Warid, Ufone and CMPak. And in the second phase FLL, WLL and LDI licenses were awarded to all existing operators. As a result, teledensity in these areas has also increased. The mobile subscriber base has reached 1.7 million mark in these areas.
Pakistan's telecom sector in general is witnessing high growth trends for the past many years. The same is expected to continue in the near future as well. Mobile sector is a particular success story where more than 2.3 million subscribers are being added to the customer base every month. The mobile penetration is expected to grow up to 57% by 2010.† Coverage of cellular mobile services has reached to over 91% of the population. Cellular Mobile companies are offering value added services of various nature and revenue from data services has increased to 3% in 2007-08. Launch of 3G will further boost data services in Pakistan.
The trend exhibits enormous confidence that the leading international mobile players have in our mobile sector. Similarly, growth of WLL is also exhibiting strong trends. With the introduction of mobile WiMAX technology across the country and PTA's decision to offer 3G license in Pakistan, it is expected that the wireless sector of the country would register promising growth.
PAGE: Don't you think that telecom sector expansion is in the economic benefit of investors only?
Dr Yaseen: I don't agree with this notion because investment in the telecom sector has had great impact on overall economy of Pakistan where large employment opportunities have been created and sector is contributing a large chunk in government revenues. Growth in telecom sector has spillover effect in all other sectors of the economy and improved the productivity of many businesses. In last four years, over US$ 8 billion have been invested in Pakistan which had a great impact on Pakistan's economy. In last 5 years, over one million job opportunities have been created in the telecom sector, which varies from skilled professionals to small vendors and unskilled workers in Pakistan. Sector is contributing over Rs. 111 billion in taxes annually and it has attracted over US$ 5.5 billion foreign investment in the country in last 4 years.
So, it is very clear that expansion in telecom sector has benefited the people of Pakistan and the results are visible and it is not correct to assume that only investor are benefiting from the telecom sector development.
PAGE: What is your vision about the role of regulator in the telecom sector development?
Dr Yaseen: PTA works with a clear vision "to create fair regulatory regime to promote investment, encourage competition, protect consumer interest and ensure high quality ICT services in the country". PTA is playing a pivotal role in development of telecom sector in the country. We have implemented government of Pakistan's liberalization policy in a most efficient and transparent manner and issued many new licenses for different services. We ensure level playing field for all the investors to generate healthy competition. To encourage introduction of new technologies in the country, we have issued technology neutral licenses. Because of this flexible and investor friendly approach, CDMA and WiMAX technologies have been deployed by many companies for WLL networks.
Pakistan is among first few countries in the region where WiMAX infrastructure has been deployed countrywide. The companies are now moving towards NGN, which will create a real converged environment. Many companies are also laying backhaul infrastructure covering length and breadth of the country. To ensure greater coverage, certain terms and conditions are included in the licenses, which bind the operators to expand their network even in the rural areas.
PTA also advises the government on policy matters and recommends measures, which can help in the sector development. One of the examples is reduction in activation tax. Previously government used to charge Rs. 2,000 as activation on every new connection. On the recommendation of PTA, this tax has now been reduced to Rs. 500 only. Similarly introduction of CPP regime has also positively affected the cellular growth. As a result of firm and transparent regulatory regime, telecom sector has witnessed steady growth during past few years. Due to sound government policy and firm regulatory regime, today, Pakistan telecom sector has become one of the fastest growing sector in the region. As a regulator, we are fully satisfied with the current pace of development and we will continue playing our role as facilitator for the development of telecom sector in the country.
PAGE: What do you think about the quality of services being provided by CMTOS?
Dr Yaseen: Monitoring of quality of service of telecom operators and service providers is a regular feature of our activity. PTA is closely monitoring the quality of service of all telecom operators with special emphasis on cellular mobile service. The Authority keeps on conducting surveys to check quality of service of different telecom services. Results are compiled and published as well. The purpose of this exercise is not to penalize the operators but to educate and guide them. It helps the operators to take appropriate measures to improve their services accordingly.
PAGE: What are yours future plans for the industry?
Dr Yaseen: we are ahead of industry and ready to introduce new technologies for the growing sector. Telecom industry has gone through revolutionary changes and tremendous expansion has taken place during the last few years. The process is still going on. Competitive environment has given impetus to the growth of the industry. Operators are "fighting" for retention of their existing customers and also for adding new ones. In this highly competitive environment, we try to ensure that consumers' interests are protected. For this purpose we have recently established a "Consumer Protection Cell" at PTA where consumers' complaints are evaluated and steps are taken to resolve these complaints. Similarly we have established a "Think Tank" in PTA which monitors the progress of the industry and recommends measures to the authority for development of the sector. Media section has also been directed to perform a proactive role to monitor and evaluate different issues highlighted in print and electronic media.
PTA is busy to enhance the broadband penetration in the country. Similarly, we have also taken an important initiative to establish community based tele-centers in rural areas through the "Rabta Ghar" Scheme aimed at providing telecom facilities to the people of underserved/un-served areas of Pakistan to bridge the digital divide.
It also provides employment opportunities to graduates of remote and rural areas. We are also planning to launch 3G services in the country. In this regard, consultation with the stake holders has been carried out through Industry Forums and Seminars etc. It is expected that 3G spectrum auction will be held late this year for which modalities are being finalized. We are also planning to expand the technical facility to monitor and block the grey traffic. As per analysis, a loss of US$ 50 million per annum was caused due to grey traffic. Therefore, a joint system of PTA and LDI operators including PTCL has been established in PTA to detect and block grey traffic.
This system was installed in 2008 and being operated by PTA. However, due to limitation of the system, 100% links could not be monitored. Therefore, expansion of the system has now been planned for which letter of intent has been signed and project is expected to be completed within nine weeks. As a joint effect of this system and increase in settlement rates, a significant amount in foreign currency reserve is expected for government of Pakistan. Another important initiative, which PTA plans to undertake, is regarding establishment of ICH.
LDI operators have agreed to setup a system jointly at PTA for RITT. As a result of this agreement, a system will be installed in PTA soon to ensure factual recording of inbound/ outbound traffic and accrue long term benefits to government of Pakistan and LDI operators.
PAGE: What are the latest developments vis--vis broadband proliferation in Pakistan? In this regard, could you elaborate initiatives taken by the PTA?
Dr Yaseen: Pakistan has observed a growth rate over 150 % during last year and we believe that there is enormous broadband market potential in the country. The foreign investors are showing interest in the area of broadband technologies; one recent example is a purchase of 75% shares of Burraq Telecom Ltd. through a joint venture investment by Qatar Telecom & A.A. Turki Corporation for Trading and Contracting of Saudi Arabia. Qatar Telecom plans to invest approximately US$ 80 million in the coming few years to deploy and operate BWA/WiMAX networks within Pakistan.
A significant reduction in broadband service cost has been observed. Monthly subscription rate for 512 kbps unlimited DSL connection has reduced from US$ 50 to US$ 14. Moreover, deployment of Optical Fiber Access Network by PTCL for improving quality of service and reduction in local loop charges are few other commercial deployments occurred during last one year.
We at PTA aim to encourage widespread investment and competition across broadband sector of the country. We have been engaged with broadband operators to finalize a comprehensive Standard Operating Procedure for broadband services and Service Level Agreement for broadband bandwidth provision. Furthermore, we are also working with various government organizations like MoIT, USF Co on issues like broadband policy review and broadband proliferation in underserved areas.
In order to discuss the problem areas of broadband proliferation, PTA in planning to organize a brainstorming open dialogue session on "The Potential and Prospects of Broadband in Pakistan" involving all major stakeholders, on 6th November 2008. PTA is working on possible introduction of Third Generation (3G) Mobile Networks in the country. It is believed that 3G mobile networks with a built-in feature of providing high-speed data services will boost the broadband usage. It is expected that steps taken by PTA in collaboration with industry players will ensure better and economical broadband services in Pakistan. It is estimated that there will be 5 million broadband subscribers in Pakistan by 2010.
PAGE: The Issue of Correctness of Mobile Subscribers' Data and Verification of Antecedents has been a major concern for Law Enforcement Agencies. What action has been taken by the PTA in this regard?
Dr Yaseen: For the verification of mobile subscribers' antecedents and illegal sale of the SIMS, PTA has issued a comprehensive policy as per government's directive. In order to check the antecedents, we have planned to implement a system for activation of new mobile SIMs after verification of customers' antecedents from January 31, 2009.† This decision was taken in a meeting of mobile company CEOs. As per this decision non-active mobile SIMs will be sold which will be activated only after the verification of consumer data from NADRA. It was also decided in the meeting that PTA will conduct a survey to check violation of this policy. If any violation is observed, the Authority will issue Show Cause Notice and impose fines on the mobile companies accordingly. Furthermore, according to the policy, 10 mobile connections could be issued on one CNIC. On this account 2.6 million SIMs have already been blocked. Sale of un-registered SIMs has been stopped forthwith and customers have been directed to verify their antecedents, otherwise their SIMs will be blocked.