The 21st century ushered in promising new scenarios of growth for our country encompassing public as well as private sector activities. Visionary aim set by the Government brought in its fold a clear direction to follow in pursuit of national objectives.
From national socio-economic developments to image building among the comity of nations, an upward pattern of progress has been witnessed since the dawn of the new millennium. Telecom field is not an exception. Its present status is characterised by unprecedented achievements; something to be proud of.
Much has been traversed in the desired direction. A few more milestones are being aimed at in the near future. At present, the sector is stabilising to give a brighter look to the manifest 'success story'.
Proactive and insightful policies were implemented in letter and spirit to transform the monopolistic sector into a liberalised regime. The challenges of great proportions encountered during the entire process of deregulation / liberalisation were combated through meticulous planning, methodical approach, vigorous execution, professional acumen and facilitating spirit. Transparency and pragmatism were of paramount consideration
An era up to 1990 (exclusive monopoly period) is marked by slow sector growth, low teledensity, poor connectivity, reliance on old technology, and non realisation of market potential. A telephone connection required 'connections' otherwise. Subscribers had countless complaints but no choices. The situation was so desperate that Pakistan did not even exist on the world's telecom map.
Then came an era of partial competition falling between the years 1990 and 2002. It permitted open competition in value added services (VAS) and limited competition in cellular mobile segment, while PTCL still maintaining monopoly in basic telephony.
Substantial growth in VAS was made in this period but growth profiles of basic telephony and cellular mobile service were insignificant. More depressing was that the telecom sector of the regional economies presented a far better picture in terms of teledensity as whole and mobile subscribers alone. During this period, telecom reforms were introduced and sector regulator was established under the Act 1996.
In the year 1996, only 2.36 million access lines were available in Pakistan with the teledensity figure flickering at a mere 2%.The status regarding the rural access was even more pathetic. By this time, only two mobile cellular operators were providing services in the country. Since the cost of service was too high, by the end of the decade, there were only 0.2 million mobile subscribers all across the country with no worthwhile increase being registered.
In 2001 Pakistan Telecommunication Authority (PTA) awarded cellular mobile license to M/s Ufone and gave determination on Calling Party Pays (CPP) regime. Although these measures gave a boost to the growth in the sector yet these were not enough to achieve the desired results.
In view of the stagnant state of spread of telecom facilities, the country leadership reconsidered the whole telecom scenario. Following the basic economic rules that were generating the growth pattern of various industries across the globe, the government control needed to be relaxed to give in more space to private sector.
The idea was to infuse healthy competition, broaden the consumer base, offer the users more choices, rationalise tariffs and bring in substantial investment. This vision coupled with sound expertise and crucial role played by the telecom regulator surfaced what at that time evolved in the form of Telecom Deregulation Policy - 2003 and the Cellular Mobile Policy - 2004.
The consequent results of liberalisation of the telecom sector in Pakistan have been phenomenal by any means. These were achieved through fair and transparent award of licenses and provision of incentives to the industry players. Since PTA had been entrusted with the task of awarding telecommunication licenses and to regulate the sector, there can be no second opinion on the fact that the regulator came up to the expectations in a big way.
The award of cellular mobile and WLL licenses has been done in a very fair and transparent manner through open bidding in the presence of a large audience of different fields including media. The process has not only been acknowledged nationally but has been recognised at the international level also. Without the facilitating environment, promising incentives and atmosphere of fair play, the telecom sector of the country would not have attracted the spectacular interest of the investors and exhibited exuberant growth patterns as it does today.
Today, six mobile companies are operating in Pakistan; PTA has issued 92 licenses to 16 telecom companies for WLL operations in different telecom regions. Similarly a total of 75 licenses have been issued for the provision of Fixed Local Loop services to 35 companies. Authority also issued 14 licenses to as many telecom companies for provision of Long Distance & International (LDI) services and in addition to that 856 licenses have been issued for the value added services in the country.
The licensees that have initiated their services in Pakistan have not only enhanced their customer base with the passage of time but have also announced major roll out plans and large scale related investment that they plan to do in the country's telecom sector.
Country's regulator has always believed in assuming the role of a facilitator. A series of incentives offered to the industry players bear a testimony to that. All of these measures taken in the larger interest of the telecom operators have helped the sector flourish significantly as well as brought down the tariff rates.
Recently, the royalty on Mobile operators has been reduced from 4% to 1.5% of gross revenue with a further reduction up to 0.5% for new entrants or for existing operators when they renew their licenses. For ISPs and card payphone operators, royalty has been reduced from 4% to 0.66% and 2% respectively. For the promotion of telecom services in the province of Balochitsan; license fee for ISPs has been reduced to 50%.
Similarly royalty on telecom equipment sale has been abolished that had earlier been 5%. For satellite services, licensing fee is abolished and only registration is required. Type approval equipment fee has also been reduced both to 50% and 39% on locally and foreign manufactured telecom equipment respectively.
The Authority also campaigned to the government in negotiating reduction in the taxes levied on telecom services. In this regard, activation tax on new mobile connections has been reduced from Rs 2000 to Rs 500. The Authority also took up the issue with all major civic bodies for the removal of taxes levied on private telecom operators regarding fee for providing NOC to install BTS Towers in addition to rent paid to property owners.
With the efforts of the Regulator, the Government of Punjab directed all its civic bodies to charge the mobile operators a flat rate of Rs 2000 annually for installation of their respective BTS Towers. Similarly with a view to promote the Payphone Industry, PTA pursued the Central Board of Revenue to consider withdrawal of 10% withholding tax which the CBR eventually abolished in the final finance bill of FY2005-06.
Another crucial element for the development of the sector is the presence of a strong regulatory framework, a catalyst for healthy competition in the market that gets confronted with upcoming issues needing to be resolved as they emerge.
In this regard, the Authority has a greater responsibility to pass determinations while taking into account the point of views of all stakeholders. The Authority has come up with a number of historic determinations that were not only in line with the spirit of fair judgement but proved to be best suited for the telecom scenario of the country.
In the post liberalisation era, the Authority approved PTCL's Reference Interconnect Offer (RIO).PTA also declared Significant Market Power (SMP) operators during 2004-5 wherein Mobilink in mobile operators and PTCL in LL and LDI segments were declared SMPs. PTA also laid down terms and conditions for Co-location, issued determination on Carrier Pre Selection & Call by Call Selection.
The Authority also issued a landmark decision on Limited Mobility keeping in view the interests of the mobile operators as well as adequate relaxation to the WLL sector so that it may flourish. PTA also plans to implement the system of Mobile Number Portability well before end of this year.
The aim is to benefit the consumers providing them varied choice of services, enhanced quality and further encouraging healthy competition and mutual trust in the market. Moreover in order to simplify the process of value added services' licensing, the regulator has introduced New Class Value License(CVAL) regime under which more than 15 possible individual licenses have been merged into just two license categories ie Data Type and voice Type.
The vision behind the telecom liberalisation policies of the Government coupled with their swift and efficient implementation by the regulator led to a growth pattern in the sector that cannot be underestimated. Today a revolutionised telecom scenario of Pakistan has drawn attention from people within and organisations abroad.
The trend of growth is reflective in increased teledensity in the country, burgeoning mobile and fixed line subscribers' base, unfolding of new investment plans of the existing and new entrants of private operators, broad based telecom services reaching out to places uncovered before, a variety of services available to the consumers from which to choose from, reduced tariff structure that is constantly coming down with attractive new service packages being offered from operators every now and then. Country's teledensity today stands at around 24% that was hovering around mere 4% at the time the telecom policies were announced.
Mobile subscriber base today stands at more than 29 million as compared to 0.17 million in year 2002-03.
There has been a phenomenal increase of approximately 1.5 million mobile subscribers being registered every month. The operators met an enthusiastic response because that was what the market was looking for in terms of increased demand pattern. Over the years, the number of WLL subscribers have gained acceleration with a base of over 0.6 million today. The number is increasing substantially with every passing day.
Today the telecom sector has a share of 1.95% in the country's GDP. The government collected an amount of more than Rs 41 billion against GST/CED earnings from various telecom services from Year 2002 to 2005. During the last two years, PTA deposited an amount of over Rs 27 billion to the government exchequer.
Since June 2003, telecom sector has attracted US $1.7 billion FDI in the country whereas during the first nine months of the current fiscal year, FDI in telecom sector has surpassed US $1 billion mark. These figures are not mere an end in themselves but one can easily draw the correlated positive effects that such a huge economic activity has generated on the overall social sector of the country.
The growth in the telecom sector has resulted in direct as well as indirect increased opportunities for the employment of approximately half a million people both skilled and unskilled, related to telecom operators, payphone business, franchises, vendors and distributors of the telecom services.
A lot of ground has been covered in terms of provision of telecom services to the people of Pakistan at reasonable rates keeping in view the interest of all the stakeholders while at the same time protecting the rights of the customers.
In this regard particularly, the Authority established round the clock consumer complaint handling section in order to play its due role towards the redressal of any problems being faced by the consumers. Through a well publicised contact number, public can have their complaints registered on which swift action is taken by the Authority.
Moreover through a very efficient vigilance cell, the Regulator has been instrumental in playing its role along with the government law enforcing agencies to curb the menace of grey traffic. A large amount of precious government earnings have been saved through unearthing many illegal call termination exchanges. Review of settlement rates of incoming international traffic has further helped in reducing the margin of profit for all elements involved in this illegal business.
With the announcement of award of permanent licenses to private operators for provision of telecommunication services in AJ&K and NAs, the regulator is diligently working on the modalities and has already invited applications for award of cellular mobile licenses so as to help telecommunication play its crucial role in the reconstruction of the quake affected areas. This is being immediately followed by licensing process for award of LDI, LL and CVAL licenses. The whole process is expected to be completed inshallah within a period of 10 to 12 weeks time.
Islamabad has been the proud host of the General Assembly meeting of the APT held in November last year registering wide appreciation for a well organised and fruitful event.
Large participation from member countries in the event went a long way towards the image building of the country. Having the president ship of the APT and being a member of numerous international Telecom organisations, Pakistan has been keenly working for the development of ICT and bridging the digital divide within the country and across the globe.
The Government and the Regulator are not oblivious to meet the challenges of new trends in the ICT field. Introduction of new technologies, encouragement of broadband services, development of emerging telecom infrastructure, provision of wireless services to the remote areas of the country, creation of telecentres in rural areas, curbing the menace of grey traffic in the country and redressal of consumers' grievances are some of the key areas that are being attended adequately. In days ahead, concrete results would appear more prominently.
Today |Pakistan has been quoted as a model for the spectacular growth that has been witnessed in the country's telecom sector. A number of countries have approiached Pakistan to assist them develop the liberalisation structure for their respective telecom industries. Recently Pakistan has been awarded with Government Leadership Award by the Global System of Mobile Association for revolutionary growth in its mobile sector.
Pakistan is the first country from the region to attain this prestigious award. Similarly ITU bestowed Pakistan with the Global Regulator's Exchange Award for the country's contribution in ITU activities. These awards are recognition o f the international community's appreciation for the sound telecom policies and their prudent implementation under the dynamic leadership of the Chairman of the Authority that has resulted in revolutionising the telecom sector of the country.
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