The Pakistan Telecommunication Authority (PTA) is endeavouring to create a congenial and enabling environment for the development of telecommunication in the country. Concrete steps towards deregulation and liberalisation have been taken to foster the rapid growth of the sector.
PTA, as a regulatory body of telecommunications, is also actively engaged in identifying and removing the bottlenecks that have been hampering the growth of the industry.
Over the years, PTA has adopted measures with far reaching effects on the growth of the telecom sector in Pakistan. A liberal, transparent and non-discriminatory licensing policy is being followed by the authority to provide a liberalised and competitive environment to the service providers and manufacturers of telecom equipment.
PTA is also persistently pursuing a transparent and open policy for the awarding of licenses for value added services, aimed at affording a level-playing field to the stakeholders and ensuring universal access to fixed line telephone customers and cellular mobile users, as well as for the expansion of the Internet and other modern telecommunication services and technologies.
The authority has always encouraged competition and has taken steps to thwart monopolistic tendencies in this vital sector of the economy, and the provide high quality service to consumers at cheaper rates.
As part of its open licensing policy, the PTA has so far issued a total of 509 licenses out of which 250 licenses were granted for card payphone services, 142 for electronic information services (EIS) and the remaining licenses were issued for other services.
In the year 2002, PTA issued the first license for the operation of the video conferencing facility. Similarly, 22 licenses for HF/VHF/UHF private land mobile/fixed, 6 Inmarsat/Satellite phones and 12 for amateur were issued during the current fiscal year. Six satellite companies have also registered themselves with the PTA.
In order to give a boost to the telecom business, the PTA has extended a number of incentives to telecom service providers. In this context, the PTA considerably reduced royalty and fees payable by the market players. Royalty on cellular mobile operators was reduced from 4 percent to only 0.5 percent of gross sales revenue minus PTCL call charges and leased line charges.
PTCL leased line charges were also reduced by 30 percent in May 2002 and further reduction of 17 percent was allowed in 2004. PTA reduced royalty on card pay phones from 4% to 2%, on Internet Service Providers (ISPs) from 4 % to 0.66 % and on equipment sale from 5% to zero percent.
The authority also curtailed Type Approval fee on telecom equipment and exempted many items from Type Approval formalities. To encourage local manufacturers, the Authority reduced Type Approval fee by about ---50 percent on locally produced equipment while 33 percent reduction was given on imported items.
Being the custodian of consumers' rights, the PTA reduced cellular mobile charges from Rs 3.68 to Rs 3.22 per minute (including GST) in May 2001, thus giving relief of about 15 percent to service users.
Besides, the PTA reduced air time tariff ceiling on cellular mobile phones from Rs 6.75 to Rs 5.75 per minute, in May 2003, with a view to ensuring that some relief was passed onto the users, as the authority observed that if the air time ceiling was reduced, at least 60 percent of the pre-paid service users, who were charging full ceiling, would directly benefit from this concession, Presently, all cellular mobile operators are offering both pre-paid and post-paid tariff packages. Fresh demand for cellular mobile connections is, however, heavily tilted towards the pre-paid option.
PTA has also taken steps to develop a telecom infrastructure and enhance access and connectivity by absorbing modern technologies and adhering to the concept of Information Communication Technology (ICT).
The authority conducted surveys to monitor the quality of service (QoS) being provided by various telecom service providers.
In order to promote the use of telephone and facilitate customers, the PTA has recently accorded approval to the reduction of landline call charges, giving relief up to 23 percent to the consumers. Besides, approval was also accorded to the reduction of installation charges for urban and rural areas up to 73 percent. In order to provide universal internet access and connectivity to the service users, the internet facility has been extended to 1900 cities and towns.
With the beginning of 2002, the telecommunication sector of Pakistan started picking up and exhibited significant growth in all segments of the industry. The cellular mobile industry has particularly displayed phenomenal growth because of the introduction of the Calling Party Pays (CPP) regime, which has proved a catalyst in accelerating the expansion of mobile phone communication.
The customer base of mobile phones jumped from 0.3 million in June 2000 to 2.8 million by the end of September 2003 and reached 3.4 million in December 2003. The introduction of the CPP regime is a major achievement of the PTA as this facility made incoming calls free on mobile phones.
All these factors gave immense impetus to the growth of the cellular mobile market. Total investment in cellular mobiles has increased from Rs 18.6 billion in 2001-02 to Rs 22.7 billion in the year 2002-2003.
Cellular mobile industry is the most vibrant segment of the telecom sector. There is still huge a unmet demand for cellular mobile phones in the country.
To provide cellular mobile facility to the remote and mountainous areas of AJK and the Northern Areas, the Authority awarded GSM licenses to the SCO to operate mobile phone service in those territories.
Paktel has also been allowed to transfer its technology from AMPS to EGSM. But in spite of all these efforts, if we compare our cellular penetration with similar economies, we find ourselves far behind. Countries like Cambodia, Gambia and Mauritania have much lower per capita GDP than Pakistan, but they have a cellular penetration more than double of Pakistan's.
It is estimated that there is a potential for the absorption of about 2 million new connections per year in the Pakistan market.
For catering to the needs of the huge population and the rising demand for cellular mobile phones, the government has decided to award two more licenses to cellular companies under the cellular policy approved by the Cabinet in January 2004.
The PTA received overwhelming response from local and international investors and received 33 Expressions of Interests (EoIs) from the intending parties for the grant of cellular mobile licenses.
Under the new system, the licenses will be technology neutral and the term of license would be for 15 years. Cell Phone policy would be reviewed after 5 years and new entrants would be obliged to cover about 70% tehsel headquarters within four years.
Bidding for the award of licenses will be held on 14th April 2004 and the licenses would be granted to the highest bidders.
Although the basic telephone segment of the telecom market grew, the rate of growth was not substantial due to the monopoly of the PTCL in basic telephony. Pakistan is lagging behind, when compared to its regional counterparts, in the expansion of fixed line telecommunication.
Teledensity in Pakistan, recorded only at 2.6 percent in the year 2003, is still lower against the Asian countries. Teledensity in India is 4.3 percent, while in Sri Lanka it is 4.6 percent.
However, the sector is now open and there is vast potential for the development of basic telephony in a country with a population of over 149 million people.
In compliance with the government's decision, the PTA has taken the initiative to put an end to the PTCL's monopoly on basic telephony and has invited applications for the award of Local Loop (LL) and Long Distance International (LDI) licenses in an open and unrestricted licensing regime.
Both types of licenses would be issued for 20 years and the policy of fixed line telephony would be reviewed after 5 years.
The PTA expects a positive response from national and international investors for the grant of LL and LDI licenses. One hopes that the entry of new operators in the fixed line telecommunication service will immensely increase teledensity and bring it at par with the regional countries in the 5 years.
The sector also expects investment from 5 to 7 billion dollars within the next 3 to 5 years.
In short, Pakistan Telecommunication Authority (PTA) is committed to bringing about a rapid growth of telecommunication systems and services.
It is devoted to providing high quality telecom services, not only in the urban areas, but also in the remote and far flung areas of the country. The launching of new cell phone companies and the operation of new fixed line operators will open up vistas for national growth, leading to the over all uplift of the common man.
PTA foresees a telecom revolution quite in the offing because of the tremendous scope and capacity for growth of the Pakistan telecom market.
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