Hello, can we talk and keep mum too?

Hello, can we talk and keep mum too?
Who could have ever thought of a day when cartel will find a place in Pakistans telecom industry? Not at least its 93 million consumers - more than half of the countrys population - given that cellular operators had been engaged in furious competition to fight for bigger market share in the past many years.
Signs of collusion in the industry was first observed when the Competition Commission of Pakistan, questioned the four cellular operators that simultaneously started charging the same amount of fees for balance inquiry service.
When the CCP inquired about the incident, the telecom bosses, of course, denied the existence of any such forum - each citing that their decision to charge 10 paisas for balance inquiry was an independent action.
Thanks to a whistleblower, however, who leaked vital information by unmasking the forensically-authenticated email correspondence between the top management of the five leading telecom operators, their denial is now exposed as a blatant concealment of truth.
Although, the telecom firms haven been found guilty yet, extracts of the email conversations available at CCPs website have given them enough substance to investigate the issue further.
The letters have exposed close coordination among the top management staff of all telecom players and explicitly show that the implementation of services tariff was a group decision to enhance revenue.
"The price tag attached with the same has earlier been agreed in the CMOs forum and has further been deliberated to be finalized as 10 paisas plus tax (meaning by 10+1.95=11.95 or 12 paisa to be precise in total); please confirm about same today, so that the implementation plan be finalized according", said one particular email.
Interestingly, one of the minutes of meeting reveals their intention to restrict the advertisement campaign for the implementation of 668-regime launched by the PTA, which was aimed to get the duplicate SIMs cancelled in order to avoid security risks and other shady practices.
The question at this point is a big why? Well, just as their hesitance to implement this 668 service was due to their fear of "a bigger scale back-lash against the industry", the creation of the forum may be because desperate times call for desperate measures.
Growth in mobile subscriptions skidded to a screeching halt in 2009, after having seen tremendous performance in the preceding years. So, it is quite natural for operators to experiment with anti-competitive practices to protect their existing market share.
Evidently that might be the case, as market share of the firms hasn changed much nearly since the time the big boys started emailing and meeting between March 2009 and December 2009.
The steep decline in average revenue per user (ARPU) during the past six years and net losses faced by most operators last year might have also induced them to pacify competition in order to improve their bottom line. Currently, ARPU at home is the lowest in South Asia, and in fact way below than that in Sub-Saharan African economies.
Though, the official CCP verdict isn out yet, the fact that Pakistans telecom industry is oligopolistic in nature, dominated by five giant players, one shouldn be too surprised if cartelization in the sector is confirmed.
Existence of such structures typically provides germinating conditions for collusion. Take for example, Indonesia, where six mobile communications operators were found guilty of price-fixing for text messaging services in 2008.
There isn any easy remedy available to put a check on collusive practices. But time and again different business case studies suggest providing licenses to new entrants to trigger a fresh wave of competition amongst the players by seizing and expanding the market share.
But for that, the PTA might have to fight against the strong connections of the cellular family.

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MARKET SHARE

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    Mobilink  Ufone  Zong  Telenor  Warid

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FY05    58%    20%    7%       7 %     4%

FY06    50%    22%    3%      10 %    14%

FY07    42%    22%    2%      17 %    17%

FY08    36%    21%    4%      21 %    18%

FY09    31%    21%    7%      22 %    19%

1HFY10  32%    19%    7%      23 %    19%

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