Ispak rejects deregulation policy
KARACHI- The deregulation policy for the telecommunication sector framed by the Ministry of Information Technology and Pakistan Telecommunication Authority fully protects the interests of the PTCL, and certainly tends to block the entry of the new investors in the field, according to the Internet Service Providers Association of Pakistan (Ispak).
In a press release issued here on July 16th, 2003, rejecting the deregulation policy, Ispak pointed out that as most of its clauses ostensibly favour the current incumbents, foreign contacts had informed the association that they were highly discouraged and were not interested in making investment under such a policy.
Quoting foreign experts, Ispak said that the policy appears to have been drawn mainly to protect and prolong the life of the local monopoly, thereby, sending a wave of disillusionment among the most enthusiastic prospective investors.
They believe that the policy has been rushed through, without the least consideration of the current global trends and practices in vogue internationally.
Since, from all indications, the international termination charges will remain constant until the next review, no thought seems to have been given to TP technology, which is making rapid advancement in conventional telephony.
The policy also neglect the net telephony, while this technology and its economic impact on the telecom sector is considered pivotal in planning the marketing strategies.
Ispak has termed the deregulation policy generally disappointing, unfriendly to new investors and eventually harmful to the existing monopoly.
It has called for thorough debate on the policy in an open forum at Karachi where most stakeholders, viz financiers and operators of long standing can participate.
They also offered to invite regional players to express their views on the policy to ensure against eventual loss from bypassing the opinion of those who really matter in this vital sector of the national economy.
Ispak also said that they were also organising a seminar with the representation of the press throughout the country, including Balochistan, for threadbare evaluation of the policy through frank and free discussion on the policy in an open forum and also on the electronic media.
They also enumerated the following points for immediate consideration of the policy makers, and to make necessary amendments in it before the international investors throw the policy in their dustbin, washing their hands of this telecom venture in Pakistan.
They demanded withdrawal of the condition of performance bond for the local entrants for LDI, in case of the applicant having been in the data operation business for the last five years.
The detailed tariff of the PTCL, as would be applicable to LDI operator, may be placed in public domain, including the leased charges for Self-healing Dark fibre, RUI DXX/ collocation charges and any other intended service charges envisaged.
ROW regulations, applicable to the new entrant, should be same as those applicable to the PTCL.
The LLI licences may be placed in two categories, one entitled for wireless operation and the second based only on cable network.
The wireless entitled may only be granted if the required spectrum is also made available to the operator through fair process.
The Ispak demand also included publicising of the proposed 13 regions and existing regions so that the viability of operation could be examined in the business plan of the applicants.
In case of both LLI and LDI, a minimum price cap is important to encourage new entrants and to provide them investment protection.
Degree of regulation and interference by the government bodies needs to be reduced to the bare minimum, they said.
They said that small investors have been sidelined by very heavy licence fee and exorbitantly high requirement of the performance bond.
The big investors will find the conditions not conducive and risk-prone as it provides no real guarantee to share/lease PTCL infrastructure. This will further encourage the grey market operation.
A timeframe may clearly be spelled out for the PTCL for carrier pre-selection, this was incorporated in the earlier draft policy, but has been deliberately removed.
The LDI licences have been put to serious disadvantage because of demand to develop huge transmission capacity, while their revenues have been restricted to only six cents/minute, while currently the PTCL pockets 19 cents (Since PTCL is also a LLI, thus, it will take away 13 cents for every six cents to the LDI).
According to Ispak, the incumbent is not afraid of LL, but is seriously concerned on international revenue. The LDI has been made more difficult.
The LLI licences have been dealt fairly, but the LDI licensees have been dealt very harshly in order to protect the incumbent unfairly.
The policy seems okay with regard to LL. In clause 4.2.1 (b), 4.1.2, 4.3.3 (d) 4.4.5 and 4.6.2, it was noticed that the LDI operation has been made most difficult and uneconomical. 4.2.1 (b) requires that the LDI operator to own up to 50 percent transmission capacity by year three, which means laying of optic fibre or MW backbone.
They also regretted absence of any policy about transmission system as yet. The policy does not make the utility service providers obligatory to provide right of way. This point alone is enough to question the business viability in six cents and call originating charges.
The policy makers should have noted that in the prevalent international economic environment investment in telecom is globally considered risk-prone but telecom investment in our environment is viewed with greater skepticism.
Efforts made to deregulate the Internet and data communication earlier did not yield a positive result, and many licences did not even start the operation, while most of the operators have collapsed because of heavy hardness of the monopoly.
The restrictive and pro-PTCL policy, in its present form, will also not be a harbinger of any successful start.
The financial analysts have already forecast that the deregulation policy has left the monopoly intact, and will give added attraction to the investors of the stocks of this giant as the fear of the deregulation has passed.
To improve the telecommunication in the country, and prepare for future, what is really needed more than a casual ‘Eyewash’, they said.
Source: Business Recorder
Date:7/17/2003
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