Pakistan’s Battle of Bandwidth Rates

Posted on October 3, 2006
Filed Under >Babar Bhatti, Economy & Development, Science and Technology
15 Comments
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Guest Post by Babar Bhatti

With some luck the Pakistani Internet user base may get a long overdue and much deserved break. That is, if the recent bandwidth rate cuts proposed by PTA are implemented and that’s where the battle is. Here’s a bit of history of the PTA vs. PTCL bandwidth rates controversy.

PTA is the Pakistan Telecommunication Authority, the autonomous regulatory agency; and PTCL is the, now privatised and run by Etisalat, Pakistan Telecommunication Corporation Limited, the leading telecommuinication provider in the country. (See earlier ATP Post on foriegn interest in Pakistan’s telecom sector).

In an effort to accelerate the spread of broadband services in Pakistan, PTA cut bandwidth rates significantly in June and asked PTCL to apply the new tariff rates. This decision was based on a policy paper (PDF version here) by PTA in April – which concluded that lack of competition and high international bandwidth rates are harming consumers and businesses.

The drastic reduction in bandwidth rates created a chain of events. Instead of complying with the PTA decision, the Etisalatrun PTCL took the legal course. In August, the Lahore High Court reversed the PTA decision on reduced bandwidth rates. In essence, then, the consumers have not yet recieved the benefit of the rate cut by PTA.

The chart (taken from PTA paper referred above) shows the comparison of domestic leased circuit tariffs between India and Pakistan.

As reported by the Pakcdma site:

Based on the LHC verdict, the PTA has called the LDIs, ISPs, software companies’ representatives and PTCL for a review meeting on its determination. In its August 7 decision, the LHC gave the regulator 60 days to reach a fresh plan of bandwidth rate cut, which has been long over due for the Pakistani market. The PTA was also directed to adopt the proper procedure for price determination by asking parties to submit and exchange their respective cases; holding a formal hearing; and issue fresh determination this time avoiding the pitfalls.

Read the PTCL response here. PTCL argued that the tariffs should be based on cost criteria.

Whatever the results may be, at least there is a process and some progress. Let’s hope for the best!

Babar Bhatti is a Telecom professional based in Dallas, Texas. See more at Babar’s blog: State of Telecom Industry in Pakistan.

15 responses to “Pakistan’s Battle of Bandwidth Rates”

  1. Babar says:

    I have serious doubts about the privatisation in Pakistan – steel mill case is one example of corruption, PTCL a case of incompetence.

    After decades of holding a monopoly, PTCL is finding it hard to deal with competition and has been using tactics which hurt consumer such as blocking VOIP.

    From my own experience and hearing from others, PTCL service is either non-existent or plain miserable. As PatExpat mentioned, tarrifs are just one item. PTCL needs to do a lot more to allow fair competition. This court case is important in the sense that it will set a precedent.

  2. Daktar says:

    Wasn’t privatization meant to bring in a REDUCTION in prices. Seems like here the government authority is pushing in the right direction (price reduction) and the multinational trying to ‘hazam karo’ the benefit!

  3. Sohail Shafi says:

    PTCL’s stone age views on looking at innovations do not surprise me at all. In fact, a few years ago, when voice over IP was becoming popular, the company shut down the internet voice channel, thinking that internet voice calls were being made at the expense of PTCL’s revenue. Following is the test of letter I wrote to Dawn back then.

    Their reaction to broadband rates is no different.

    PTCL shuts voice chat channel

    AS a technology entrepreneur living in the US, I was saddened to read the Oct 15 story entitled “PTCL shuts voice chat channelâ€

  4. Umair says:

    Well lets not all gang up on PTCL. As a private company their job is to make money. Why should they just give their profits away?

  5. PatExpat says:

    OFF THE TOPIC

    Since the privatisation fiasco of PTCL, I dont have much faith in PTCL or Etisalat.

    The purpose of sealed bids is to invite the best offer and the purpose of earnest money is to ensure that one remains committed to the terms of bidding.

    When after the bidding, Etisalat realised that they have bid very high, they went back on their commitment. Rather than forfeiting the earnest money, our government bent over backwards sending the privatisation minister to UAE cajolling them to stay the course.

    These are our assets (making billions in profits). If anyone wants to buy them, it should have been on our terms and not the terms of buyers. But then crazier things have happened in Pakistan.

    Now purpose of inviting foreign investors (we dont want to privatise assets to local owners – even the government treats Pakistanis as less of a professionals than foreigners) is to have immediate foreign inflows.

    However, as per the final agreed upon terms, Etisalat will pay us over five years from the earnings of PTCL. We could have done that ourselves.

    So we did not get dollars, we did not get them right away; why did we privatise it. I believe that business is not government’s business – but this is a pure sell out.

    ON THE TOPIC
    As reported in Business Recorder today

    [quote post=”338″]The PTA 2006 report, released here, cites high broadband tariff charged by PTCL and difficulty in access to its cables and ducts as major reasons for low broadband penetration in Pakistan. The other reasons are poor quality of copper, delayed in provision of DSL connection and difficulty in accessing PTCL sources.

    Moreover, the authority said that it was also facing problems on issues related to local loop unbundling, transmission media, collocation and Optic Fiber Access Network (OFAN) from PTCL besides high prices of International Private Lease Circuit (IPLC) and Domestic Private Lease Circuit are very high as compared to other regional countries.

    The tariff offered by PTCL to Internet Service Providers (ISPs) for higher capacities are several times higher than the similar and advanced countries, it added. [/quote]

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