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TelecomPlus WTISD 2009
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The economy in general and our telecom industry in particular, is passing through an exceptionally harsh
period and not just because of the global meltdown. The worsening law and order situation, coupled with
political uncertainty, is taking its toll. There have been alarmingly high number of incidents whereby
gunslingers in far-flung but otherwise settled areas are occupying the cell sites and demanding huge
amounts from cell phone operators for allowing the sites to function. The energy crisis is another front which
has increased the overheads for telecom operators. It also didn’t help that the MoITT has been without a
minister for about a year now. This is also a reflection of where the ICT stands in the scheme of things of the
government. To say that investors’ confidence is shaken, would be putting it too mildly. And all this at a time
when we desperately need investment to enhance economic activity.
The issue of APC (Access Promotion Contribution) has been hounding the LDI operators for quite some
time. The government had imposed a charge of 7.5 cent p/m on incoming international calls and advised the
operators to charge about 12.5 cents per minute on incoming traffic. Theoretically, the LDI operators are
supposed to be charging this amount. The operators however assert that in reality, they are getting even
less than 7.5 cent p/m from the foreign operators and the imposition of 7.5 cent APC is thus an unrealistic
demand. It is pertinent to mention here that call rate in Bangladesh is 4 cent p/m while in India it is 3 cent p/m
on incoming international traffic. The APC in these countries must be lower than the respective call rates.
The APC of 7.5 cents being demanded from local operators is grossly inflated. Previously APC used to be 4
cents p/m while from November 2007 to April 2008 it was 2 cents.
Recently PTA served final notices demanding the outstanding APC for USF from LDI industry failing which
licenses for incoming international calls were to be suspended. PTA has now relaxed the time schedule
allowing the operators to clear their dues in small installments during the next 15 months. But this does not
seem to resolve the basic issue. The LDI industry is of the view that the demand of APC for USF is not as per
license condition. Of particular mention is the assertion of LDI operators that in the Deregulation policy, APC
for USF is described as a portion of the premium over termination cost whereas, according to the LDI
operators, the Regulator has imposed APC far higher than the premium itself. Such a high rate of APC is not
only unsustainable; it is also a strong incentive to steal through illegal terminations.
To add salt to the wound, and in apparent violation of the level playing field mantra, PTA withdrew the
demand of Rs.2 billion APC for USF from PTCL. Previously, in granting such concessions to PTCL, it used to
be argued that since PTCL was entrusted with the task of providing access in far-flung or less lucrative
areas, it was pointless to collect funds from PTCL on this count, only to give it back later for its utilization in
access promotion in selected regions. But that scenario changed drastically after Deregulation. It is mobile
operators rather than PTCL who have finally brought about the connectivity revolution. That greatly weakens
the concession rationale, if at all, it was justified in the first place.
There is another downside of demanding APC about twice the call rate in the region. It would serve to curtail
the traffic which is not without its negative impact on the economy. Calls made from abroad to relatives and
friends in Pakistan are a source of earning foreign exchange. Since calling from abroad to Pakistan has
become costlier, there is a noticeable change in calling pattern. Now relatives and friends of expatriates are
calling them from Pakistan rather than the other way round and the previously incoming calls from abroad
are being increasingly replaced by outgoing calls. The friends and relatives of almost every known expatriate
of this scribe are making more outgoing international calls and receiving less than they used to. On one
hand the foreign exchange on account of such calls in not coming in, while on the other, foreign exchange is
moving out because of a reversal of termination destination.
The telecom sector of Pakistan needs to generate success stories to attract foreign and local investment and
inject the badly needed confidence in the economy at this very critical juncture of our history. The state can
do better by not being shortsighted in its endeavors to collect more revenue in the short term, only to lose
much more in the long term if businesses fail. The woes of the telecom sector are already formidable without
the bombshell of APC exploding over LDI operators.
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