Now that the matter of International Clearing House is into litigation, the LDI operators jollification seems to have come to a halt. Two days ago, the Lahore High Court reportedly extended, till November 14, its October 25 ruling that suspended post-ICH "tax" over voice calls terminating in Pakistan.
For starters, the ICH has been serving as a single termination exchange for all international, incoming voice traffic - all being routed via PTCLs infrastructure. The 14 LDI operators share the total quantum of voice traffic terminating in Pakistan, based on their respective, historic market shares.
News reports suggest that the LHC ruling is about suspension of the "tax increase" on international calls after ICH went into effect on October 1 - and not against the ICH itself. Informed sources maintain that the ICH mechanism is working as it did for most of last month, albeit the termination rates are said to have gone back to the pre-ICH regime level following the court order.
Reportedly, the Ministry of Information Technology, PTA, PTCL, and the Competition Commission of Pakistan are the respondents in this case. While CCP is yet to file its reply, the federal government is said to be bracing up to defend its decision of establishment of the ICH as per the MoITs August directive and to insist on its right to settle rates or increase taxes in this particular sector.
The story is still unfolding, and it remains to be seen if the CCP decides to use this rather vocal platform and air its competition-related concerns regarding ICH.
However, there is one thing that has to be understood. As it appears, there has been no "tax increase" on international calls; neither has any new tax been levied. It is the Approved Settlement Rate (or ASR) of international call termination that has been increased by the PTA after ICH operationalisation.
The ASR is composed of two major components: LDI operators share and Access Promotion Contribution (APC). Sources say that both components were increased in the post-ICH milieu, which is why the overall ASR went up over eight cents per minute, leading to hue and cry from expatriate Pakistanis that their operators (foreign carriers) had started charging twice or even thrice than what they used to.
Between October 1 and October 25, LDIs earned more cents per minute due to ICH. They could be paying a greater amount of taxes, but that is not due to any new tax or "increased tax" rate - it could be that they are making more money than pre-ICH days. In other words, the increase in LDIs share may be swelling operators topline, with corresponding contribution to the national kitty as per existing tax laws.
As the telecom professionals and informed observers are well aware, increasing the APC component also does not amount to increasing the tax. As per PTAs regulations, if an international call ultimately terminates on a land line, the APC amount goes to the receiving FLL or WLL operator. However, if the call terminates on a mobile network, the APC component is submitted to the Universal Service Fund.
Again, either the APC money lands into the accounts of LDIs and other local loop operators, or goes to the USF which was created five years ago to spread ICT services to the unserved and underserved areas of Pakistan. USF money is not governments tax revenue - it is the funds provided by the ICT industry for the advancement of various services, like fiber optic, broadband and telecenters across the country.
Therefore, it is important to differentiate between the possible increase in "tax revenues" due to increased ASR post-ICH from the rather publicized & misconstrued "tax increase" on international calls. Thats when the picture becomes clear, to allow for a critical analysis of ICHs institutionally divisive aspects.