Telecom Sector in Pakistan(Economics Project)

8/3/2019 Telecom Sector in Pakistan(Economics Project)

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Telecom Sector In Pakistan

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EXECUTIVE SUMMARY

The overall objective of the activity is to develop µbasic¶ understanding with respect to

the competitiveness of Pakistan¶s telecom industry through a gap analysis and needs

assessment that results in an Inventory of Current Challenges.

Despite being call over as a leader in ³Mobile Industry Growth,´ the continued success

and rapid expansion of Pakistan¶s telecom industry is threatened by a growing number of

factors as evidenced by the recent global information technology competitiveness report

(2006-2007). This report, ³Connecting to the Networked Economy,´ highlights that

Pakistan has shown a gradual decline in last three years; it has moved from the rank of 63

in 2004 to that of 47 in 2010-11.

All rankings of a country¶s competitiveness include several telecoms related indices such

as penetration and services provided. The exercise and the report it produces serves as the

basis for analysis and action to ensure that Pakistan¶s telecoms industry contributes in the

most efficient and effective manner to improving Pakistan¶s overall competitiveness.

In the meantime, the deregulated market with its emphasis on competition was providing

strong support for what became an extended boom in the mobile market. This boom

continued until the national economy started to falter in 2008/09. At the same time as the

mobile sector continued to grow through this period, it has been at a much slower rate.

Since quietly reaching the 100 million subscriber milestone in 2010, the mobile markethas been growing in 2011 at a rate of around 5% per annum. Compared with other

markets, this slowing happened at an early stage with the national penetration only

slightly more than 60%. On a positive note, mobile networks were already covering more

than 90% of the population and this coverage was continuing to be expanded.

Pakistan has remained as the fastest growing mobile telecom market in Asia. Currently,

the telecom sector is undergoing intense competition among the six mobile operators, one

major fixed-line operator and few small fixed-line operators. In the best interest of their

long sustainability, the mobile operators are forming strategies driven towards being at

lowest cost, extensive network coverage and connectivity, innovative products and

segmentation.




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1. EVOLUTION OF TELECOM SECTOR IN PAKISTAN:

1.1 History:

The history of telecommunication in the sub-continent is as old as the history of our

slavery. In the subcontinent before independence this sector was under the Indian postand telegraph department and developed as a successful industry. The role of

telecommunication in Pakistan can be broadly divided in to four phase.

1.1.1 Pakistan Post and Telegraph:

At the time of independence and telecommunication services were performed by a single

department known as Pakistan post and telegraph (P&T).his department started its

telephone service with only 12346 telephone lines and seven telegraph offices all over

Pakistan. All the telephone service at that time was manual. This department continues its

business up to 1962.the government of Pakistan adopted the government of India

telegraph act 188 to control and direct the activities of telecommunication.

1.1.2 Pakistan Telephone and Telegraph (PT&T):

The first step towards reform in telecommunication sector was made in 1962, when the

Ayub Khan government decided to split up the (PT&T) department into two separate

departments Pakistan post and Pakistan telephone & telegraph (PT&T) under the

presidential ordinance. The PT&T in fact a civil service department under the minstrel

controls. This department was headed by director general. The decision making power

was concentrated with the post of dg, whilst the responsibilities were delegated to general

managers and chief engineers and general managers reporting directly to the director

general. The centralized structure of PT&T caused inefficiency in operations and long

delay in implementing decisions. At the time of inception of PTCL the total number of

employees working in PT&T was 45686 and total network comported of 922,000.

1.1.3 Pakistan telecommunication corporation (PTC):

The decade of 1990s brought about many changes in the economic structure of Pakistan.

The government of Pakistan pursued the deregulation and liberalization policy in

production and service industry. The major change in this regard was privatization and

deregulation of many of the departments of government of Pakistan. The objective was to




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reduce the burden of the government minimize the bureaucratic influence and improve

the efficiency of these departments.

A major breakthrough in the history of telecommunication in the country occurred with

the gradual deregulation and privatization of t) t, at the first stage Pakistan telephone and

telegraph department (PT&T) was converted into a statutory corporation Pakistan

telecommunication corporation. On December 5th ,1990 the PT&T department was

transformed into Pakistan telecommunication corporation with a legal identity separate

from the government. This change in the statute introduced by the government of

Pakistan enabled PTC to move from administrative to contractual relationship with its

customer. It provided the opportunity for the development of telecommunication facilities

to an unprecedented level and also for an increased customer satisfaction. Working under

the PTCL act noxv111 of 1991, the corporation was responsible for establishment

maintenance and operation of telecommunication services telephone telegraph telex,

telefax and data transmission with in the country and establishment of international link

with all member countries of ITU (international telecommunication union).

Pakistan telecommunication corporation in it five years life spread the network of its

services all over the country and the total number of telephone lines expanded TP

2127344 in addition to telegraph the telex services. The total number of employees at the

end of 1995 was 53705.

In addition to inland telephone network PTCL did a lot to improve the international

communication. The international communication network of PTCL comprised of variety

of satellite earth stations, terrestrial systems, submarine cable system and coastal radio

systems, as well as international gateway exchanges.

1.1.4 Pakistan Telecommunication Company Limited (PTCL):

Pakistan telecommunication Company Limited (PTCL) is a company established to

undertake the telecommunication business formally carried on by Pakistan.

Telecommunication corporation (PTCL) Pakistan telecommunication corporation (PTCL)

was transformed into Pakistan telecommunication company limited (PTCL) on January

1st,1996 under Pakistan telecommunication reorganization act 1996 according to which

PTCL took over all the properties assets rights and obligations of PTCL.




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Under the PTCL reorganization act, 1996 the telecommunication sectors were split up

into four bodies:

Pakistan Telecommunication Company limited (PTCL)

Pakistan telecommunication authority (PTCL)

National Telecommunication Corporation (NTC)

Frequency allocation board (FAB)

Pakistan telecommunication authority is a regulatory body responsible for monitoring the

telecommunication business in Pakistan. It frames rules and regulation for private

telecom companies such as mobile phone companies, internet service providers, paging

companies and pay card phone companies. It also issues licenses to the new companies in

entering to this business.

National Telecom Corporation (NTC) is responsible to provide the telecommunication

services to the various departments of government and armed services.

Pakistan Telecommunication Company limited is the primary provider of

telecommunications services in Pakistan. The range of its services includes basic

telephone, telegraph, fax, telex, email, digital cross connect, public data network,

internet, isdn, and other digital facilities. The total number of installed telephone lines at

June 30, 1998 was 35, 19,877 while the total number of actual lines in service was 26,

60,898.

2. SOCIAL AND ECONOMIC IMPACT:

2.1 Impact On Economy:

The impact of telecom deregulation on overall economy is quite obvious. After the

deregulation of the telecommunication sector, the sector has seen an exponential growth.

The mobile telephone market has exploded fourteen-fold since 2000 to reach a subscriber

base of 91 million users in 2008, one of the highest mobiletele-densities in the entire

world. In addition, there are over 6 millionlandlines in the country with 100% fibre-optic

network and coverage via WLL in even the remotest areas. Pakistan is on the verge of a

telecom revolution and is by far the most attractive sector in Pakistan in terms of Foreign

Direct Investment coming into the country. Since liberalization, over the past four years,

the Pakistani telecom sector has attracted more than $9 billion in foreign investments.




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2.1.1 Contribution ToGDP:

A total of Rs. 235,613 million revenue was generated by telecom sector in 2007. This

contribution has major impact on economy of Pakistan. The sector is currently

contributing 2% GDP out of 7% to the Government of Pakistan.

2.1.2 Investment:

In the last 2-3 years the telecom sector has attracted record inflows of FDI. It is expected

that the trend of investment may continue in the next 5 years because large potential

market still exists in Pakistan and all operators intend to grab their share.

During 2009 Foreign Direct Investment (FDI) stood at 815 million dollar. Total

investments in the sector stood at 1.7 billion dollar and Telecom imports grew by 20

percent and reached 1.6 billion dollar.

2.2 Impact On Society:

Telecommunication sector has also had a remarkable impact on Pakistan¶s social society.

It has increased the access to communication and information for general publicby a

formidable proportion. It has also played a very important part in social integration,rural

uplift and public awareness. It has reduced distances and belittled the disparities.

3.ANNUAL GROWTH AND FUTURE PROSPECTS:

3.1 Highlights:

Total telecom teledensity reached 65.2 percent.

Telecom revenues reported in 1st half of the FY2011 were over Rs. 180 billion compared

to Rs. 167 billion earned during the same period last year.

Cellular Mobile sector shares 67 % of the total telecom revenues, whereas fixed line

services share is 26% of total revenue generation of telecom sector.

The share of mobile operators in total revenue of mobile services is according to

subscriber share of each operator.

In the first half of the FY2011 the total contribution to national exchequer by Telecom

sector was Rs. 56.3 billion which was Rs. 49 billion during same period last year,

showing growth of 15%.

FDI and investments in Telecom sector showed notable decline.




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3.2 Teledensity:

In contrast to the Pakistan economic situation the growth of telecom sector remained

positive, though the growth rate hasn¶t been the same that we have witnessed in recent

years ± in fact it has been it¶s at its lowest pace during the reported period, but the good

thing is that direction has been positive.

The total teledensity growth kept oscillating between highs and lows till the end of year.

Total teledensity (including mobile, fixed and WLL services) stood at 65.2%. The

teledensity growth n the first half of the year (Jan to June 2010) was 0.9% whereas in the

second half of the year (July-Dec10) the growth was 1.7%, showing more stability and

resilience as compared to 1st half of the year.

Total teledensity of the country grew by more than 2.67% in the last one year.

3.3 TelecomFinancials:

Although the telecom sector has been experiencing decreasing ARPU¶s, exorbitant

advertisement budgets, power crisis, and negative net profits, aggressive competition,

market saturation and decreasing exchange rates, the financial health of the sector

remained stable and didn¶t take a down turn.




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The telecom revenues reported in 1st half of the FY2011 were over Rs. 180 billion which

were 167 billion in the same period of FY 2009-10. The revenue growth during the

reported period kept moving between highs and lows where in July-Sep 2010 it was -3%

whereas in Oct-Dec 2010 it was 4%.

Cellular Mobile sector is a driving force in terms of revenue in the telecom sector where

it counts 67% of the total telecom revenue whereas fixed line services share is 26% of

total revenue generation of telecom sector.

The share of mobile operators in total revenue of mobile services is according to

subscriber share of each operator, where Mobilink has maximum share in total revenue

followed by Telenor and Ufone.

3.4Contribution To Exchequer:

Amid high telecom usage, the contribution of telecom sector to national exchequer

through taxes, duties and regulatory charges kept growing. The sector has been

contributing over Rs. 100 billion each year since last few years.

At the end of FY2010 the total contribution was over Rs. 109 billion of which almost

50% came from GST.




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In the first half of the FY2011 the total contribution to national exchequer was Rs. 56.3

billion which was almost Rs. 49 billion in the first half of FY2010 showing growth of

15% since last year. It is therefore expected that by end of FY2011 the total contribution

to national exchequer would be higher than the last year¶s contribution.

According to an estimate, telecom sector contributes more than 90% share in total taxes

by the services sector of Pakistan which is being diverted to provinces under 18

Amendment.

Similarly share of GST in total contribution from telecom sector is also very impressive

where almost 50% of total contribution comes from GST collection. Only in the 1st half

of FY 2010-11, total GST collection is Rs. 23 billion which was Rs. 21 billion in the

same period of FY 2010.

GST collection in telecom services mainly comes from mobile sector and its share in total

GST collection is 86% followed by basic services as 11%. The Activation Tax

contribution to national exchequer stands at Rs. 3 billion at the end of 1st half of

FY2010-11, which was Rs. 4 billion in the same period last year.

Main reason for drop in the activation tax is due to market maturity, there is time for the

Government to abolish this tax on operators to further strengthen its growth whereas in

order to increase GST the government needs to reduce the existing 19.5% rate, so that

usage could be enhanced, which would result in better GST collection.




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4. FOREIGN DIRECT INVESTMENT:

The overall inflow of Foreign Direct Investment in the country shows a negative trend in

last few years and same is the case in Pakistan Telecom sector where FDI has reduced up

to some extent in the last two years, however, no drastic reduction has been witnessed.

FDI in telecom sector of Pakistan shows about 17% decline in quarter ending December

2010 on compared to previous quarter. In case of telecom the FDI is showing some

major reduction since early 2010.

At the end of FY 2010 the total FDI in telecom sector was US$ 374 million which was

US$ 815 million in 2009. Similarly the FDI in telecom was US$ 112 million in the 1st

half of FY 2011, where as it was 181 million in the same period of FY2010. It is

predicted that the total FDI in telecom for FY2011 would be less than FY2010.

5. INVESTMENT IN TELECOM SECTOR:

Telecom sector now moving towards maturity and saturation is experienced in

metropolitan cities ± hence the investment in the sector is decreasing.

Although in FY 2010 the investment situation was not alarming, however, investment

figures for first two quarters of FY 2010-11 are not very encouraging. A total of US$ 270

million have been invested during Jul-Dec 2010 in telecom sector in Pakistan which is

36% less than the investment made first six months of 2010 which stands at US$ 423

million.




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The imports of handset automatically increased right after the reduction in import duty

and increase in total imports were witnessed in the reported period.

Total imports of US $ 388 million were recorded in the 1st half of FY 2010-11, as

compared to US$ 329 million in the same period of FY 2009-10.

While looking at the quarter wise situation, it can be observed that total imports are

almost the same during the first two quarters of FY 2010-11.

A closer analysis of the first two quarters of FY 2010-11 in comparison with previous

two quarters reveal that the industry imported other telecom apparatus worth of US$ 300

million during Jul-Dec 10 of the FY2010-11 whereas it was US$ 259 million in the same

period of FY 2009-10.




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7. CELLULAR SECTOR IN TELECOM OF PAKISTAN:

7.1 Mobile Penetration (Regional Comparison):

Mobile penetration has increased to 60.40% in Year 2009-10 as compared to previous

year 58.20%. Pakistan stands on number two in the region after Malaysia which has

96.8% mobile penetration.

7.2 Market Share:

In terms of Market share, Mobilink and Telenor excel with 32.5% and 23.9%

respectively. Whereas remaining three cellular companies show downfall in regards of

Market Share.




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7.3 Number Of Mobile Phone Subscribers:

The number of mobile phone subscribers has increased to 100.15 million as of September

2010 PTA stats. The total number of mobile subscribers is 100,134,748 as of September

2010.




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7.4 Cellular CompaniesAnd TheirSubscribers:

7.5 Growth:

PTA reported 30.125% growth in the year 2009-10 as compared to last year 28.159%.




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7.6 Financial Data:

y 235.74 billion rupees in revenue was earned by the mobile industry during fiscal 2010, a

growth of 11 from the preceding year.

y 4.84 millionis the number of subscribers added to the network by cellular operators in

2009-10.

y 66 percent of the total revenue earned by the telecommunication sector came from the

mobile industry.

8. TELECOM PRIVATIZATION IN PAKISTAN:

As the wave of privatization and de-regulation spread in North America and Europe,

Pakistan also felt its effect. The Government of Pakistan began to introduce private

participation in telecommunications and licenses were awarded for cellular, card-operated

payphones, paging, for data communications services in the country.

In 1991, Pakistan Telegraph and Telephone was corporatized into Pakistan

Telecommunication Authority (PTA or the ³Corporation´) through the enactment of

Pakistan Telecommunication Corporation Act of 1991.

In 1994, the Government of Pakistan decided to get domestic and international capital

markets for PTC, which later become PTCL (Pakistan Telecommunication Company

Limited) though subsequent partial privatization. Keeping pace with the fast changing

telecom world, PTCL took key initiatives to modernize and upgrade its network and takes

quantum leap, rapidly expanding the country¶s current trends in IT & Telecom services to

all concerns of the country, under the hood of Pakistan telecommunication Authority.




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9. FRAMEWORK OF TELECOM IN PAKISTAN:

The Pakistan telecommunication industry, coupled with public policies of the

Pakistan telecommunication authority, has undergone numerous changes in recent times.

Recapitulating just the last decade, the once sophisticated commodity: mobile phone is

now with-in the reach of every segment of the society, the most current trend in IT in

Pakistan in the present era. The telecommunication liberalization process provided a

foundation stone towards an amazing inclination of telecommunication sector with award

of 2 Mobile Telephony(Cellular), 14 Long Distance and International(LDI), 38 Fixed

Local Loop(FLL) and 17 Wireless Local Loop(WLL) licenses. Till today, total mobile

subscribers stand close to 90 million.

The current trends in IT will become more widespread in the years to come, especially

for those who need to securely connect to information sources on the move. The most

important proposition to continue this telecom escalation is a continuous coordination

among stakeholders from industry, government, academia and the end-users.

10. PAKISTAN TELECOM¶S BENEFIT TO GOVT.:

Pakistan has remained as the fastest growing mobile telecom market in Asia. Currently,

the telecom sector is undergoing intense competition among the six mobile operators, one

major fixed-line operator and few small fixed-line operators. In the best interest of their




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long sustainability, the mobile operators are forming strategies driven towards being at

lowest cost, extensive network coverage and connectivity, innovative products and

segmentation.

As far as competitive advantage of telecom industry is concerned, Pakistan has good

urban telecom infrastructure however there is dire need to drive infrastructure growth in

rural areas. It can be achieved utilizing Universal Service Fund. There is need of skilled

human resource to sustain telecom sector growth. For that, industry-academia linkage can

play an important part. There is huge demand of telecom and IT services in the country.

The main revenue generation is done by voice based services. Short messaging service is

considered to be the second best revenue generating application so far. Telecom operators

have launched value added services which have become very important over the last few

years. Due to market growth, operators are also focusing on retaining customers,

improving quality of service and introducing packages that concentrate on brand loyalty,

fractional minute billing, international roaming and data services. Mobile telecom

operators realize the need to segment their customers (based on age, preferences) and

announce value-added packages to meet the needs of all segments of society. Recently

introduced value added packages by top telecom operators (both mobile and fixed) were

focused on youth segment, students as well as business users.

The Government of Pakistan is benefiting from telecom industry in terms of increased

revenues obtained in the form of taxes, increased employment, and access to the

inaccessible areas, enhanced economic activities and better living standards. The demand

of industry services can be highlighted from the fact that number of cellular subscribers

has more than tripled in the last two years. Revenues of Mobile sector have increased at

an average growth rate of over 80% per year over the last few years, despite the

unhealthy forecasts due to global and regional socio-political situation. The increase in

revenues is mainly due to sharp rise in the number of mobile subscribers and reduction in

tariff.

Taxation on mobile telecommunication industry can be expressed in terms of total cost of

mobile ownership in order to calculate the burden on the end user. Various taxes

including corporation tax, license fees, withholding tax and sales tax contribute to

increase cost of mobile ownership. In Pakistan during 2006-07,total revenue collected by




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the Government in the form of taxes and regulatory fee was more than Rs.100 billion

which is 30% higher than the last year (Source: PTA). It is important to note that the

reduction of taxes imposed on mobile services in Pakistan in the last few years has

considerably reduced the cost associated with mobile phone ownership and increased

demand. However, increased benefits to the mobile and telecom industry would arise if

fiscal burden on mobile services is further reduced.

11. PAKISTAN TELECOM LAWS:

11.1 Historical Background And Development:

Consequent to the Lord Mountbatten¶s 3rd June 1947 Plan the Indian Independence Act,

1947 was enacted by the British Parliament and Pakistan emerged on the world map as an

Independent & Sovereign Dominion. In terms of Section 18 (3) of the Act of 1947 the

Laws of British India were applicable and continued as law of the Dominion (Pakistan)

with necessary adaptations until the other provisions are made by the Legislature in

Pakistan. The then Governor General (Mountbatten of Burma) was empowered in Section

9 (1) to carry into effect the operation of the Act of 1947 who accordingly issued ³The

Pakistan (Adaptation of Existing Pakistan Laws) Order dated 14th August 1947 (G.G.O.

No. 20 of 1947).

Section 3 of the Order of 1947 read as ³As from the appointed day, all existing Pakistan

Laws shall, until repealed or altered or amended by a competent Legislature or other

competent authority, in their application to Pakistan and any part or parts thereof, be

subject to the adaptation directed in this Order´. Through this legislative mechanism

Pakistan inherited plethora of colonial and other legislative instruments, hundreds of

which were repealed and the remaining were retained/adopted, adapted and extended

through various Acts, Ordinances promulgated in different phases of time by the

Legislature in Pakistan.

At the time of independence the laws in force in Pakistan relating to Telecommunication

were ³The Telegraph Act, 1885 (XIII of 1885)´ and ³The Wireless Telegraphy Act,

1933 (VII of 1933)´. These were extended and adapted in Pakistan through ³The

Adaptation of Central Acts and Ordinances Order, 1949 (G.G.O. No. 4 of 1949)

and Central Laws (Statute Reforms) Ordinance 1960 (XXI of 1960).




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The Act of 1885 was the primary governing telecommunication statute. There was a joint

Director General of Posts, Telegraph & Telephone under the Act of 1885. The Act

granted exclusive privilege to Government (Posts, Telegraph & Telephone [PTT]

Department to establish, maintain, working, licensing, regulating the Telegraph within or

any part of Pakistan. The government was the governing and controlling authority of

telecom sector in Pakistan. Likewise, The Wireless Telegraphy Act was enacted in order

to regulate the possession of wireless telegraph apparatus.

In 1962 Posts and Telegraph (Amendment) Act, 1962 (V of 1962) was enacted which

amended Telegraph Act, 1885, The Post Office Act, 1898 and The Wireless

Telegraphy Act, 1933. The purpose of the Amending Act was to split up the Postal

Department and the Telegraph and Telephone Department. The PTT Department

slumbered for about 30 years with no active, substantial and innovative development in

telecom sector.

The arena of development, innovation and liberalization starts from 1990-1991. By 1991

the scenario changes, The Pakistan Telecommunication Corporation Act, 1991 (Act

XVIII of 1991) was promulgated which created the independent statutory corporation

named ³Pakistan Telecommunication Corporation (PTC)´ and Telegraph & Telephone

Department was merged into PTC. The Corporation with perpetual succession took over

all the assets and liabilities of the PTT Department. In pursuance to government

competitive and liberalization policy in relation to telecom opened field to private sector

and PTC started out-sourcing few of its services i.e card payphones services and pre paid

calling card operations to private companies. Although in the Act of 1991 there was no

regulator in its true sense but attributes of regulator, to some extent, were existent in PTC.

The PTC was responsible in the field of telecommunication for development, research,

improvement in quality, advice to government and determination of tariff subject to

approval of government, maintain liaison with foreign government and other obligations

as any regulator performs.

In 1994 in order to further liberalize and open the telecom industry and to transfer the

telecommunication services to private sector and the matters connected thereto the

Presidential Ordinance ³Telecommunication Ordinance, 1994 (Ordinance LI of

1994)´ was promulgated on 13th July 1994. To promote, maintain fair competition and




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regulate the telecom industry and telecom services the regulatory bodies ³The Pakistan

Telecommunication Authority (PTA)´, ³Frequency Allocation Board

(FAB) and ³National Telecommunication Corporation (NTC)´ were established.

The independent regulator (PTA) was established for the first time in the history of

telecommunication field in Pakistan under the 1994 Ordinance. The Ordinance also

caused the federal government to incorporate the ³Pakistan Telecommunication

Company Limited (PTCL)´ under the company ordinance, 1984 which replaced the PTC.

The Company was provided the exclusivity to provide the basic telephone services in

Pakistan for a period of seven years.

The Ordinance of 1994 repealed The Telegraph Act, 1885 (XIII of 1885) and certain

sections of Pakistan Telecommunication Corporation Act, 1991. The 1994 Ordinance was

to face its constitutional death upon expiry of four month as declared in Article 89 of the

Constitution of Islamic Republic of Pakistan 1973, therefore, before its constitutional

expiry life was given to it afresh through another Presidential Ordinance No. LXXVII

of 1994 dated 7th November 1994. This Presidential Legislation under Article 89 of the

Constitution continued until the Ordinance was presented in the Parliament. The

Presidential Ordinances are Ordinances Nos. (XXIII of 1995 dated 7th March, 1995),

(LXIII of 1995 dated 5th July, 1995), (CIII of 1995 dated 30th October, 1995)

and Pakistan Telecommunication (Re-Organization) Ordinance, 1995 (CXV of

1995) dated 27th November, 1995. (XXX of 1996 dated 7th March,

1996)and Ordinance No. LXXVII of 1996 dated 4th July, 1996. Every subsequent

ordinance repealed the previous one. Finally the ³Pakistan Telecommunication (Re-

organization) Act, 1996 (XVII of 1996)´was passed on 17th October 1996.

11.2 Salient Features Of The Act Of 1996:

Some of the salient features of the Act of 1996 are:

Creation of Regulator

Regulation of Telecommunication Industry and Services

Transfer of telecommunication regime to private sector

Powers of Federal Government to Issue Policy Directives

Licensing

Establishment of PTCL as Company under the Companies Ordinance, 1984




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Creation of National Telecommunication Corporation (NTC) to provide telecom

services to armed forces, defense projects, federal government, provincial

governments and local authorities etc.

Formation of Frequency Allocation Board (FAB) with the responsibility of allotment

and management of frequency spectrum. The FAB replaced the Pakistan Wireless

Board established under ³The Wireless Telegraphy Act, 1933´ and took over the

function of the Wireless Board.

Creation of Pakistan Telecommunication Employees Trust with the object of to take

care of the interests of the employees of the Company.

11.3 Deregulation Policy 2003:

Section 8 of the Act of 1996 empowers the federal government to issue policy directives

and PTA is under obligation to adhere and comply with the directives. Deregulation

implies the removal of control of the government. It also implies the liberalization of the

telecom market.

The exclusivity of Pakistan Telecommunication Company Limited (PTCL) to provide

basic telephone services under the Act of 1996 expired on 31stDecember 2002. In July

2003 the Government of Pakistan (GOP) announced ³Deregulation Policy for the

Telecommunication Sector´. The Policy sets out the following objectives:

To increase service choice for customers of telecommunication services atcompetitive and affordable rates;

To promote infrastructure development, especially infrastructure that will increase

teledensity and the spread of telecommunication services in all market segments.

To increase private investment in private sector.

To encourage local telecom manufacturing/service industry.

Recognizing the challenge to incumbent, PTCL.

Accelerate expansion of telecom infrastructure to extend services to un-served

and under-served areas.

Liberalize the telecommunication sector by encouraging fair competition

amongst service provider.

Maintain and effective well defined regulatory regime that is consistent with best

international practice.




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The Rules also narrates the quality of services, exchange of information between the two

operators, Tariff etc.

ii. Access Promotion Contribution Rules 2004:

Means the contribution made by Long Distance International (LDI) operator/licensee to

Local Loop (LL) operator/licensee or Universal Service Fund (USF) created and

maintained by Federal Government. USF has been established for providing access to

telecom services to people living in un-served, underserved, rural and remote areas etc.

iii. Card Payphone Service Regulations 2004:

These have been issued by PTA under Section 5 (2) (O) of the Act of 1996. The

Regulations deal with terms and condition of the license, its modification, renewal and

termination, monitoring procedure, accounting & auditing, Inspection by PTA,

responsibilities, assignment, complaint systems, code of commercial practices,

relationship with customers by the payphone operators and with other operators etc.

iv. Interconnection Dispute Resolution Regulations 2004:

The Regulations provide the comprehensive procedure of dispute resolutions between the

operators.

v. Other Regulations and Guidelines:

The Pakistan Telecommunication Authority has framed and issued certain other

regulations and guidelines. These are:

Fixed Line Tariff Regulations 2004

Vehicles Tracking Services Regulation 2004

Burglar Alarm Services Regulations 2004

Amateur Radio Services Regulations 2004

Audio-tax Service Regulations 2004

Non-voice Communication Network Service Regulations 2004

Registration of Satellite Service Provider Regulations 2004

Trunk Radio Services Regulations 2004

Interconnection Guidelines 2004

Access Promotion Regulation 2005

Number Allocation and Administration Regulation 2005




P |

To administer the numbering plan so that there are sufficient numbers available.

To monitor compliance with national and international telecommunications

equipment supplier and service providers.

To monitor compliance with national and international telecommunications

equipment suppliers and service providers.

PTA has all the traits of a good regulator and its primary functions, powers and

responsibilities are:

To regulate the establishment, operation and maintenance of telecommunication systems

and the provisions of telecommunication services; receive and dispose of application for

the use of radio-frequency spectrum; promote and protect the interest of the users of

telecommunication; promote and available the high quality, efficient and cost effective

telecommunication services; investigate and adjudicate on complaints; grant, renew,

modify, transfer, monitor and enforce the telecom licenses; regulate tariffs and prescribe

telecommunication equipment¶s; provide guidelines and determine the terms of

interconnect arrangements .

In the larger context, we hope, that PTA shall keep up, adhere to, perform and enforce the

telecom laws without any discrimination between the incumbents and the other telecom

operators so that the healthy competitive environment could flourish and shall further

keep herself abreast of the latest development, law and technology, in telecom sector.

Telecom Sector in Pakistan(Economics Project)

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