ISLAMABAD: The Competition Commission of Pakistan (CCP) on Wednesday accepted the assurances given by China Mobile and Ufone for their misleading advertisements and decided not to impose any penalty on them.

However, the companies have been warned that in future CCP will take a very strict view of non-compliance or contravention of the Competition Ordinance, 2007.

According to CCP, both Ufone and China Mobile have assured through an undertaking in writing that they will comply with the provisions of the regulations.

Earlier, the CCP had issued show-cause notices to both the companies for misleading advertisements.

The CCP had observed that Zong’s advertisement ‘8 Anay per call’ advert was false and misleading and in violation of Section 10 of the Competition Ordinance, 2007.

The CCP noted that the said advertisement lacked reasonable basis regarding the price, call rates, or inclusiveness of government taxes being not specified and its character and the duration of call at which the rates were applicable was not stipulated clearly.

The CCP observed that the televised advertisement of Ufone’s Uwon Package did not mention that the advertised rates, to call other networks, are applicable on per minute calls.

As per the submissions of Ufone the advertisement contains a disclaimer. However, the same is in English and was neither visible nor readable.

The order further states that, such information must be clearly conveyed to customers as the advertised call rates increase, when 21 per cent FED are included in the advertised call rates.

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With a day to go before Eid-ul-Azha, mobile telecommunication SMS (Short Message Services) and voice networks have started to choke, despite telecom companies claims of having taken ‘special measures’ to prevent congestions, writes Moayyed Jafri.

The ‘special measures’ include slashing of SMS packages, or in certain cases cancelling them altogether. The same strategy was adopted by a couple of telecom companies back at the Eid-ul-Fitr. And now some other companies have also gone for the option of cancelling their SMS packages.

The Pakistan Telecommunication Authority (PTA) has directed all cellular mobile operators of Pakistan to ensure quality of their services on the Eid and other such occasions, to inform their subscribers adequately about the withdrawal of any packages and bundle offers prior to their suspension.

The directions were issued in a meeting with all mobile operators, held at PTA Headquarters.

The operators were asked to ensure the inclusion of adequate information in media campaign with regard to validity period of the SMS bundle package offer along with operator’s discretion to withdraw the said offer.

The operators were directed to intimate the Authority well in advance whether or not the SMS bundle package had been withdrawn during the occasions such as Eids/New years etc. the operators would also ensure the provision of quality services to their subscribers during the period of upcoming Eid-ul-Azha. It may be mentioned that value-added services offered by mobile operators such as SMS are un-regulated services in terms of pricing and validity. Further, the bundled packages are optional services offered by the operators which require consumers to opt-in and agreeing to the terms and conditions offered by the operators.

Since SMS bundle packages are not mandatory packages, the PTA is only regulating quality of services whereby the operators are required to conform to the quality parameters as per the license terms and conditions.

A large number of people send SMS from their cell phones to greet their family and friends on Eid.

The SMS flux reaches its max on Chand Raat and, according to telecom engineers, over 80percent of the total mobile using population floods the network simultaneously on the Raat whereas, on a normal day, the total simultaneous users are 20 to 40 percent.

Most of the mobile-users consider SMS as a very inexpensive method of communication, saying they can express their feelings in only 160 characters within seconds. They say the SMS, like e-mail, can also be reviewed or stored in phone for as long as you wish. One can also forward SMSs to an individual or a group of people just by pressing a single button.

If, on the one hands, the SMS is used as a tool to greet each other at different occasions, on the other hand, it has also become a medius of expression for those who link such events with the prevailing economic and political circumstances in form of an amusing satire. The rocketing inflation is the main theme of majority of SMSs on this Eid as people find it hard to afford a sacrificial animal.

The most common SMSs circulating are like this, ìI am sending you a Bakra in this SMS so that you may not find an excuse for not sending me my share.”

The youth are more into sending and forwarding SMSs to their friends and relatives. They also use SMSs to inform one another regarding the latest updates as well as their plans of Eid.

ìI am receiving and sending some 30 to 40 SMS per day,” says Khurram, an MBA student, adding most of his fellows follow suit.

Political and religious parties have also started using SMS to communicate with masses.

A large number of people also received EID greetings from unknown numbers saying that the greetings had been sent by Mian Nawaz Sharif and Mian Shahbaz Sharif. One such message reads, “I wish a very happy Eid to my countrymen..Mian Nawaz Sharif.”

Likewise, various charity organizations are also sending SMSs to the masses asking for Zakat and donations on Eid.

A Intelligent Networks (IN) engineer Salman Arshad, who works for a leading telecom company, says, in order to fulfil the need of high SMS traffic, special technical modification are made in the system which include cutting down on the buffer timings, delaying the delivery of the SMS. He said that almost all telecom companies had deployed special technical back-up and support teams, including engineers and technicians, to cater to network congestion. A number of employees miss spending Eid with their families as they work on the Eid days to make sure that the masses enjoy greeting each other over SMS and voice calls, he adds.

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ISLAMABAD: The growth in cell phone sector has witnessed a bit of a squeezing trend as Pakistan Telecommunication Authority started blocking millions of unregistered connections after the launch of SIM information system-668.

Although the new system was introduced officially in mid-October, the subscriber’s based widened only by 10,452 in this month, which showed that users base may contract after blocking of unregistered numbers.

In October, the overall customer base reached 95.918 million with only 0.01 percent growth from preceding month. Besides Ufone, all four cellular phone companies witnessed minimal addition of users on their network.

Owing to downfall in revenues, most of the telecom operators adopted ‘cost-cutting measures’ during the year 2008-09. Throughout the year, the sector’s financial health could not be improved in accordance with the expectations owing to taxes and falling exchange rates, which placed unprecedented burden on the operators import bills.

A senior official at a cell phone company said due to economic slowdown, saturation in the market and global financial crisis, the total investment in the telecom sector during 2008-09 has reduced.

He said despite the fact that the operators have speedily rolled out their infrastructure, reaching out to most of the population, there still remains huge areas like Broadband, WLL and manufacturing, where investment opportunities exist.

To cope with the financial crunch, telecom operators adopted optimization of human resources and cut in employees perks.

As per data, the leading mobile operator, Mobilink, slipped from green to red zone in earnings because of the falling exchange rate and rapid drop in the subscribers’ base.

A dismal situation in fixed-line penetration is the major area of concern for the policy-makers and the regulator in Pakistan. After issuing a number of licenses to the fixed-line operators, the regulator believed that the market forces would play their due role for its expansion, but unfortunately, this could not happen.

However, despite these difficulties, the sectors revenue grew by 19 percent which poses confidence in the government and regulators’ policies. Unlike expectations, most of the fixed-line operators could not roll out the infrastructure maintaining the incumbent operator still the dominant player with its old copper based infrastructure a main hurdle in the sector’s growth.

It was also expected that a rapid roll out by wireless technology (WLL) would compensate the declining fixed line penetration, which too did not happen due to lack of investment by WLL operators. Furthermore, the WLL operators like Wateen and Wi-tribe have smartly diverted their resources to Broadband expansion in 3.5 GHz and invested on new technology like WiMax.

This, too, caused slow growth in the fixed line sector. Issues like right of way and lack of unbundling also proved major hurdles in the fixed line sector’s growth. A huge investment is required to roll out new generation of fibre networks in the country.

This gives a major opportunity to large scale investors to secure their investments in Pakistan in this segment of the industry. During the year, a total of $1.6 billion worth of investment has been made by all the operators, of which the cellular mobile share is about 75 percent.

The WLL has marginally increased investment from $52.8 million in 2007-08 to $82.11 million in 2008-09. However, the rest of all of the sectors have reduced the level of their investment. During this period, Pakistan attracted FDI worth $3.7 billion altogether. In the current year, the telecom sector received over US $815 million FDI.

Major countries which invested more than 70 percent in last five years in Pakistan’s telecom sector included United Arab Emirates, United States of America, Norway and China. The UAE emerges as the leading country investing over 36 percent of the total FDI in the telecom sector in the last five years. UAE invested in companies like Wateen, Warid Telecom and PTCL.

Etisalat, UAE based company, bought out 26 percent shares of the PTCL worth $2.4 billion. The UAE has invested over $2.3 billion in the telecom sector of Pakistan since 2004-05. China Mobile has its first overseas adventure in Pakistan cellular mobile sector, in addition to telecom manufacturing, through companies like ZTE and others. Investment from China exceeded US $599 million in the telecom sector of Pakistan during the last five years.

Telenor, a Norway based company, also brought about half a billion US dollars foreign investment into Pakistan during the last five years. The telecom sector contributes 1 to 2 percent in the total GDP, making its share in total tax revenue as 6 to 7 percent per annum. During the year 2008-09, the sector continued to contribute handsome amount in national kitty through various taxes and regulatory charges. – APP

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New Delhi: After slashing call tariffs, mobile telecom companies have started offering SMS (short messaging service) at dirt cheap rates. Dual technology player, Reliance Communications (RCom), has triggered a tariff war in the SMS space by pricing a text message at an unbelievable 1 paisa, for both pre- and post-paid, GSM and CDMA users.

To get the benefit of the offer, one must pay a monthly fee of Rs 11 though. The other offer from the RCom stable is unlimited SMSes by paying Re 1 a day, with the rider that the number of SMSes should not exceed 15,000 in a month — that’s a cool 500 messages per day, per rupee.

“RCom, with its first in the industry initiative, aims to revitalise SMS usage in the country,” RCom president Mahesh Prasad said. The latest data from the Telecom Regulatory Authority of India (Trai) shows the average number of outgoing SMS per subscriber per month for GSM (global system for mobile communications) players was 28 in the quarter ended June, down from 30 the previous quarter. In the case of CDMA (code division multiple access) firms, the average number of SMSes per subscriber per month was 11 in the quarter ended June, a little over 10 the previous quarter.

Other telcos refused to comment on their respective strategies in response to the RCom move, though they are all studying and analysing the business impact. Most companies are expected to make announcements on reduction of SMS rates soon.

An industry source told DNA Money on the condition of anonymity that free SMS on the same network is likely to be the next gameplan in the industry. “Only when you send an SMS to the network of another telco would you need to make a payment.”

Value-added services (VAS) constitute 8-10% of the total telecom industry revenue at present. SMS is a part of VAS. According to industry estimates, SMS contributes around 4-6% of GSM revenues and 2-3% of CDMA revenues.

An industry insider said the reduction will not have too much of an impact as telecom has become a voice-driven industry as call tariffs are at a record low. “Slashing of SMS rates may not have that big an impact on the industry as voice tariffs.”

PricewaterhouseCoopers associate director and telecom advisor Arpita Pal Agarwal called the RCom move “an extension of a tariff war that the telecom industry is currently witnessing.” Going by her, the low-tariff trend would continue till consolidation sets in.

Ernst & Young partner Prashant Singhal said the cut in SMS rate may not be a significant driver for a subscriber to change the service provider. High SMS usage is seen among the youth, but on the whole, an SMS rate cut will not have as pervasive an impact as a reduction in voice or call tariff. “People are not so sensitive to SMS cost,” he said, adding, the SMS volume may go up by 15-20% though the rate cut is much higher. Turn to Page 24

The telecom tariff war was triggered by Tata Docomo’s per-second billing. As mobile number portability is set to be introduced in the four metros and ‘category A’ circles like Maharashtra, Karnataka and Madhya Pradesh by the end of this year, and the rest of the country by March 20, 2010, tariff war is expected to only intensify. This is despite most telcos arguing that tariff is only one of the considerations for the subscriber.

With number portability coming cheap to customers, at Rs 19 or below for changing the service provider while retaining the same number, telcos would want to continue playing the tariff card for sometime so they can win over their rivals’ subscribers. In the backdrop of the revenue de-growth that many telecom companies are already facing in India, the tariff war may have serious implications for the sector.

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ISLAMABAD: Pakistan Telecommunication Authority (PTA) has directed all cellular mobile operators to ensure quality of service during Eid days and other such occasions and inform subscribers properly about withdrawal of any packages and bundle offers prior to their suspension.

The PTA issued these directives in a meeting with mobile operators at PTA headquarters.

The regulator asked the companies to ensure inclusion of adequate information in any media campaign about the validity period of SMS bundle package along with their discretion to withdraw the said offer.

The operators were told that they should intimate the regulator well in advance whether the SMS bundle package would be withdrawn during occasions like Eid, New Year, etc.

It may be mentioned that value-added services such as SMS packages offered by the mobile operators are un-regulated in terms of pricing and validity. Furthermore, bundle packages are optional which require consumers to opt for and agree to the terms and conditions offered by the operators.

Since SMS bundle packages are not mandatory, the PTA says it is only regulating quality of service and the operators are required to conform to quality parameters as per terms and conditions of the licence.

On Eid-ul-Fitr, it was observed that some mobile operators withdrew their SMS bundle packages without prior notice to the subscribers and the PTA. In this connection, the PTA received several complaints from the mobile subscribers.

The PTA took strict notice of the situation and wrote to all mobile operators demanding explanation.

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Pakistan’s Daily Times is reporting that the country’s Universal Service Fund has awarded telecoms contracts worth approximately PKR1.25 billion (USD15 million) for the provision of broadband services in unserved areas of the Hazara Telecom Region (HTR) to Pakistan Telecommunication Company Ltd (PTCL) and Wateen Telecom. The two companies will be paid PKR266 million to provide services in the Abbottabad, Batagram, Haripur, Kohistan and Mansehra districts of the region. Further, the telcos will set up 145 educational broadband centres across the region, alongside 21 community broadband centres.

In addition, Wateen has also inked a deal to provide fibre-optic connectivity to unserved tehsils (administrative divisions) in Central Balochistan. Wateen will receive PKR986 million for laying more than 1,100km of fibre-optic cable in eleven tehsils, with more than 700,000 people expected to benefit from the project.

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The State Bank of Pakistan and the Pakistan Telecommunication Authority have agreed to introduce a unified regulatory framework for enhancing mobile banking in the country.

“It has been decided to set up a Joint Regulatory Committee,” said a joint statement released after a meeting held at SBP, Karachi recently between Syed Salim Raza, Governor, State Bank of Pakistan and Dr Mohammed Yaseen, Chairman PTA.
This Committee, which will comprise members from both the SBP and PTA, will to introduce unified regulatory framework for Third Party Solution Provider (TPSP) system. It will propose modification in existing regulatory or legal framework, if needed. Further, an M-banking
Stakeholders Group (including mobile network operators, financial institutions, Ministry of Information Technology, PTA, SBP, SP/integrators) is also proposed to be set up, which would address technical standards, product and services, licensing regime and relevant operational
issues etc.
“We hope that this understanding will encourage innovative technological products which would ultimately enhance outreach of financial services in the country,” the statement said. Mobile banking offers a variety of financial/non-financial functions, including merchant
payments, utilities bills payments, fund transfers, and remittances etc. The synergy likely to be created by the financial institutions, mobile operators and other partners will bear very promising results.
In Pakistan, such innovative services have been possible through introduction of Branchless Banking Regulations (BBRs) by State Bank. Subsequent to BBRs, the Ministry of Information Technology issued Policy Directives to PTA to prepare a framework on technical
implementation of BBRs.

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ISLAMABAD: Cellular subscribers rose 6.3 million in fiscal year 2008-09 as compared to 25 million net additions in 2007-08, suggesting that the saturation in the market, economic slowdown and heavy taxes could be major reasons for the slow growth, annual report of the Pakistan Telecommunication Authority (PTA) showed.

Regarding complaints received by the PTA from consumers of cellular operators during July 2008 to June 2009, total complaints stood at 7,479 out of which 45 per cent complaints were related to misuse of service, obnoxious and fraudulent calls or SMS.

Amazingly, the PTA report states that only nine per cent complaints were related to quality of service (disruption/faults in service). However, consumer complaints regarding PTCL showed that out of total 5,288 complaints, 73 per cent were about quality of service, disruption/faults in service in 2008-09. On the issue of market share in terms of subscriber base of mobile phones, the report states that the main contributor to the net increase was Telenor, which added about 2.8 million subscribers while Zong and Warid added 2.4 million each during last year.

Having more choice available to consumers resulted in a reduction in the share of Mobilink by 15 per cent while other operators show increase in their market share.

Although Mobilink is still enjoying major market share in cellular subscribers, it receives a setback by losing around three million subscribers in 2008-09.

During the reported period, Mobilink continued to stay at top in the country’s mobile market with 29.14 million subscribers, followed by Telenor and Ufone competing fiercely for the second position with 20.9 million and 20 million subscribers respectively. Both the companies registered a subscriber growth rate at 16 per cent (Telenor) and 11 per cent (Ufone) correspondingly; however the growth in subscribers of Telenor (69pc) in the preceding year was much higher than that of Ufone (29pc).

Warid ended this year with a total subscriber base of 17.8 million. However, Zong has been reported a subscriber base of 6.4 million.

In 2009, total number of Mobilink subscribers stood at 29.136 million, Ufone 20.004 million, Zong 6.386 million, Instaphone 34,048, Telenor 20.893 million and Warid 17.886 million. Total revenues of telecom service rose to Rs333.882 billion in 2008-09 against Rs278.508 billion in the last fiscal year 2007-08.

Out of total revenues, the share of cellular operators in revenues stood at Rs212.423 billion, Local Loop Rs62.640 billion, LDI Rs47.969 billion, Wireless Local Loop (WLL) Rs2.670 billion and VAS (estimated) Rs8.179 billion during the fiscal year 2008-09.

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KARACHI: Telecom sector of Pakistan has shown 20 percent growth in its revenues by generating Rs 327.8 billion total revenues in fiscal year 2008-09 while the government collected Rs 112 billion in the form of taxes from the sector.

According to the Annual Report for year 2008-09 issued by Pakistan Telecommunication Authority (PTA), teledensity of Pakistan stood at 62 percent showing a growth rate of 5.4 percent hence sustaining positive growth trends in the sector. The PTA report further says that the reported period telecom sector continued to grow positively in terms of subscription, revenues and teledensity. It managed to attract $ 815 million Foreign Direct Investment (FDI) in 2008-09. However, as most of the operators are foreign-based, the pessimistic outlook of global economy compelled the telecom operators to curtail the infrastructure expansion plans, nevertheless total investments in the sector stood at $1.7 billion.

During the current year, the sector contributed a total of Rs 112 billion to national exchequer in the form of taxes whereas telecom imports also grew by 20 percent and reached $1.6 billion.

The mobile penetration reached 58.2 percent and total mobile subscribers reached 94.3 million with more than 90 percent of the country having access to mobile services. The trend in subscription remained tilted towards prepaid subscription with 98 percent prepaid subscriptions whereas only 2 percent subscribers are postpaid. Although the financial strength of mobile segment remained invariably still, the cellular revenues grew by 16 percent and stood at Rs 212 billion at the end of 2008-09. The mobile investments dropped by 48 percent and reached $1.2 billion in the reported year. The industry ARPU stands at $2.48 showing a drop of 20 percent from last year.

Major milestones achieved by PTA for mobile sector includes taking up the responsibility to convince the government of Pakistan to facilitate the sector by brining down the tax rates on telecom industry which resulted in reduction in the rate of GST from 21 percent to 19.5 percent, in addition to bringing down the activation tax by 50 percent while reducing the import duty on mobile handsets by 66 percent by cutting it down from Rs 750 to Rs 250 in budget 2008-09. During 2008-09, basic services (LL, WLL & LDI) showed a healthy revenue growth rate of 26 percent, contributing Rs 113 billion to the sector revenue which is around 34 percent of the total telecom sector revenue, however with the declining trend, fixed line teledensity reached 2.2 percent with a total of 3.5 million fixed-line subscribers in the country.

Wireless local loop (WLL) has been able to sustain positive growth by winning the trust of customers. The WLL teledensity stands at 1.6 percent with 2.65 million subscribers across Pakistan. Long Distance & International (LDI) operators have been in quandary for last few years due to high settlement rates and alarmingly high grey/illegal telecom traffic.

PTA took notice of the situation and initiated a number of steps in close coordination with LDI stakeholders. As a result, LDI sector experienced exceptional growth, reduction in illegal traffic and improved call rates. Currently, there are 09 companies providing LDI services via 163 Points of Presence (POP’s) all across Pakistan.

Proliferation of Broadband was experienced in the past two years. Broadband subscriber base grew by 146 percent adding 245,727 subscribers during 2008-09. There are currently 413,809 Broadband subscribers in Pakistan as compared to 168,082 in 2008. As Broadband is still in its infancy stage in Pakistan, therefore, penetration level is relatively low i.e. 0.26 percent. Broadband connection charges for 1 Mbps connection dropped below Rs 1000 for the first time in history, which is an unusual incentive for new broadband customers.

Telecom sector showed growth in areas of Azad Jamu & Kashmir and Northern Areas of Pakistan (AJK & NAs) also as by the end of fiscal year 2008-09, total teledensity of AJK & NAs stands at 39.9 percent up from 33.1 percent last year.

Almost 82 percent population of the AJK & NAs is covered with mobile services. Today more than 270 cities/villages and towns have network coverage of all six operators in the region.

PTA has also completed licensing of WLL (Wireless Local Loops) services in AJK & NAs and has auctioned spectrum in 3 telecom regions. It is expected that WLL will be a successful service in AJK and NAs due to cheaper rates and easy availability. With the current global and local political and financial situation, the telecom sector had to face tough challenges in the current year. However, being a Regulator, PTA has worked diligently for the betterment of the sector so that consumers, investors and government can all be benefited from it. Due to the reforms in the sector carried out by the Government and effective regulatory interventions of PTA, signs of recovery can be seen and it is expected that during the ongoing financial year the telecom sector would perform well and stand up to the expectations of all.

Keeping in view the vision of the present government of Pakistan, PTA worked for the betterment of the people of nation at large and for national security. This year PTA decided to work on following four focus areas namely Consumer Protection, Promoting ICTs, Promoting Competition and Ensuring National Security in addition to routine regulatory activities.

During the year 2008-09, PTA donated Rs 201 million (20 Crore 10 Lac Rupees) to the “Prime Minister’s Special Fund for the Victims of Terrorism”, established for the welfare and rehabilitation of Internally Displaced Person’s (IDPs). Additionally, PTA in collaboration with mobile operators, through SMS service, contributed Rs 5.67 million to Prime Minister’s Special Fund for Victims of Terrorism and Chief Minister Punjab’s Special Fund for IDP’s. PTA employees also contributed their one-day salary to the relief fund for earthquake victims of Balochistan.

In order to safeguard consumer interest and tackle their grievances, PTA launched a comprehensive complaint handling mechanism on 24th July 2009. Consumer Protection Department at PTA has received and redressed more than 80,000 individual consumer complaints since its establishment. PTA issued Consumer Protection Regulations, Anti-SPAMs Regulations to control the obnoxious and unsolicited calls and Subscribers verification Regulations. In order to encourage dialogue and input from all stakeholders, PTA arranged a public forum in Karachi on 7th August, 2009 and similar events are also in the pipeline for other cities. The second most important focus area of work for PTA was the promotion of ICT’s in Pakistan where the Authority intended to devise an effective mechanism to introduce emerging information & communication technologies, and extensive proliferation of broadband services in Pakistan. In this regard, a number of steps have been taken during the year including the establishment of regulatory platform for Government and the stakeholder’s interaction to identify core areas and develop guidelines for different ICT issues.

In order to promote competition, PTA took number of steps during the reported year including Reviews of Access Promotion Charges, pricing policies of mobile operators, interconnection guidelines, PTCL RIO etc. In addition to this, a number of surveys were carried out to check the quality of different telecom services. PTA finalized a revenue sharing agreement between ISP’s and PTCL for providing free Dialup Internet services in Pakistan. It issued directives to mobile operators for proper advertisement of Government taxes and services charges on telecom services. The deteriorating security situation in Pakistan pushed the regulator to take some major precautionary steps in order to assist Government of Pakistan in curbing the security threats. In this regard, a number of steps were taken including blocking of unregistered SIM, measures against elimination of grey traffic, preparing comprehensive plan for disaster management, monitoring and reconciliation of international telephony traffic and putting up system for activation of new SIM after verification.

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