Competition Commission of Pakistan stops Pakistan Telecommunication Authority from monopolising phone calls -Pakistan Press Foundation (PPF)

Paksitan Press Foundtion

Competition Commission of Pakistan stops Pakistan Telecommunication Authority from monopolising phone calls

By: Mansoor Ahmad

LAHORE: International incoming and outgoing call rates will register a steep increase if the Pakistan Telecommunication Authority (PTA) goes ahead with its plan to allow all incoming and outgoing international calls only through the PTCL but the Competition Commission of Pakistan has created major hurdles.

The CCP has, in a policy note issued to the PTA on August 28, termed the decision anti-competitive and said that it smacks of collusive behaviour, eliminating all other companies having internet bandwidth.

Moreover, allocation of quotas to the LDI operators would give them a monopoly that would act as a barrier to any new entrant.According to the current arrangement, the 14 LDI operators in Pakistan route their international calls traffic either through the PTCL network or Transworld. At present the LDI operators charge the overseas operators two to three cents per minute for all calls that terminate on their network in Pakistan. The overseas LDI operators similarly charge these Pakistani LDI operators even lower rates for the calls placed from Pakistan to their countries.

Under the proposed new arrangement PTCL has been authorised to negotiate new higher rates with overseas LDI operators. The LDI operators in Pakistan have been allocated quotas on the basis of which they would get the payment from PTCL for all incoming international calls at each operator’s network. According to CCP, the new proposed rate for incoming international calls is 8.8 cents per minute.

This would definitely increase the profits of all LDI operators as there would be no competition and each would get its share through PTCL.The CCP has already notified in its policy note that the existing 14 LDI operators and PTCL first came to the CCP in October 2011 to ensure that the agreement (similar to one that has been notified by the PTA) they desire to enter into is not illegal or anti-competitive.

During the proceedings, Transworld, another operator facilitating LDI operators in international call traffic, apprised the CCP that it would amount to regulation of a deregulated telecommunication market through private sector players. While the CCP hearing was in progress, the LDI operators sought permission to withdraw their application.

The CCP granted permission to withdraw in February 2012 with the observation that it has severe competition concerns and instructed the applicants that if they intend to enter into such agreements in future they would consult the CCP again so that competitive norms of the market are not abused.

The Ministry of Information and Technology directed the PTA on August 13 to establish an International Clearing House (ICH) Exchange on the same pattern as that disclosed by LDI applicants to the CCP in August. According to sources the LDI operators and the PTCL were about to ink agreement on August 30 when someone leaked the news to the CCP.

The CCP promptly issued a special order on August 30 to the PTA asking it to furnish information under section 36 of the Competition Act. The CCP referred to the policy note issue to the PTA and MoIT on August 28.

The note states “the commission has learnt that the LDI operators are expected to enter into and execute an agreement at PTA premises today for the establishment of the ICH Exchange. Therefore, in pursuance of Section 36 of the Act, PTA is required to confirm this particular fact and state its stance.”

The order further asks PTA to “Kindly note, as advised in the policy note, the proposed ICH arrangement involves price fixation and sharing of market (quota allocation) between the LDI operators, which are considered illegal, being the most pernicious anticompetitive conduct. In the event, the proposed ICH Exchange agreement is entered into, it shall result in initiation of proceedings in accordance with law against all concerned”.

At the conclusion of the special order the CCP expressed hope that the PTA being a regulator would act according to the law. Chairperson CCP Rahat Kaunain Hassan termed the PTA approval of ICH a retrogressive measure for, at best, a short term gain at the cost of long term losses both for the consumers as well as the telecom industry, which has over time emerged as a vibrant sector in our economy.

“Such policies are not only against the competition law but even against the Deregulation Policy 2003 which expressly states that as the markets for particular services become effectively competitive, the PTA shall reduce the regulatory burden in respect of such services, while maintaining appropriate anti-competitive safeguard,” said Hassan. Hassan added that this kind of an arrangement would only strengthen cartel-like behaviour.

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