Telecoms, internet in Pakistan

Of course PTCL has 1700Mbps of unused (spare, hoarded, unsold) bandwidth coming in off FLAG and the SE-ME-WEs. Reducing the wholesale price would mean using this, surely that way lies madness…..

PTA is still focussing on buying bandwidth when the time has come to start creating bandwidth. ISPs should be made to interconnect, much in the same way that phone companies are. That way more revenue is earned by Pakistani companies, we are likely to have hosting startup here, more jobs for IT graduates…. Interconnects mean free bandwidth for ISps. But who wants free bandwidth? More madness…..

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PTCL denies bandwidth rate cut

By Imran Ayub

KARACHI: Pakistan Telecommunication Company has denied rate cut for its international bandwidth service despite announcement in June 2006, as the privatised entity reveals in a plea it has not received any circular from an international consortium, which operates undersea fibre cable link.

Sources in telecom said local companies including Internet service providers and other telecom service operators recently approached the PTCL about non-implementation of its June 2006 orders, which had cost them more than $5 million in six months, the concerned department denied to charge reduced tariff, saying the international consortium FLAG (Fibre Link Around Globe) has not issued any notification about tariff revision.

“It is to inform you that we have no written evidence circular from our tariff department regarding the revision of tariff for IP transit FLAG VPOP connectivity,” a source quoted a letter from the PTCL’s international revenue department when it was questioned over higher tariff by one of the local operators.

“Therefore we can not bill customers on reduced tariffs without objective evidence,” added the PTCL letter.

The sources said the ISPs and other telecom service providers were making regular payments in accordance with the reduced tariff for international bandwidth but in a surprise move they started receiving arrears for the monthly advanced bills against IP transit and FLAG services.

“The ISPs and other companies later approached the PTCL but instead any positive any response the PTCL started issuing notices for payments without furnishing the reasons of accumulated arrears as against the regular release of timely payments,” said the source privy to the PTCL and ISPs negotiations.

The PTCL in June last announced to cut international bandwidth rate from $76,000 per two megabits a month to $60,000 as a first move after the Etisalat took over the management control after the company’s privatisation.

The decision attracted appreciation from the local telecom industry as the announcement also included tariff cut of FLAG services. However, now the telecom operators say they have started receiving bills with arrears that defines their previous bill payment, which were paid in line with the reduced tariff rates.

“To avoid dislocation of our services the international revenue PTCL was again approached with the request dated to provide the details or reasons of accumulated arrears,” said one of the operators, who wished not to be named.

“Finally we received a communiquÈ from the PTCL which says they have no written evidence from the FLAG to offer reduced tariff.”

He questioned the PTCL claims and said the FLAG Telecom representative had already officially communicated their agreement for the reduced same prices.

“The PTA (Pakistan Telecommunication Authority) has already showed concern over the PTCL tariff rate and the recent approach of the company would hit the industry interest, which is already bearing higher cost of doing business in Pakistan,” he added.

“In the best interest of supporting broadband services in the country the PTCL high ups and the regulator itself should intervene and issue directives to the department concerned for implementation of long pending reduced tariff effective June 2006.”

As MNP is set to launch in Pakistan any month now here is an interesting Economist article about what happened in Japan. Summary: prices didn’t go down but customers got more and better services.

This is quite interesting because Paktel is the first International company bought by China Mobile, the world’s biggest wireless carrier by market capitalisation.

other links:
Xinhua
Financial Express, India
Light Reading
Reuters

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China Mobile takes control of Paktel

The News, KARACHI: China Mobile is set to enter into Pakistan’s cellular industry, as the Asian telecom giant has reached a $284 million deal with the Luxembourg-based Millicom International to acquire its operations in Pakistan Paktel, one of the six cellular operators in the country.

Sources in telecom said the Millicom International, which operated both AMPS and GSM cellular services through Paktel in Pakistan had formally announced the deal to finally wrap up its more than 15-year operations in the country.

“Millicom International has signed an agreement for the sale of 88.86 per cent shareholding, in Paktel Ltd to China Mobile Communications Corporation,” said a Millicom International statement.

“The transaction implies an enterprise valuation for Paktel Ltd of $460 million. The total cash consideration payable to Millicom as a result of the transaction (including the repayment of inter-company debt) is approximately $284 million.”

It said the completion of the transaction is subject to certain regulatory approvals and procedures and if such requirements were met, conclusion of the deal was expected to occur in late February 2007.

“Now the two parties would formally approach the telecom authorities in Pakistan to get a nod over the deal,” said a source close to the Millicom’s operations in Pakistan. The Millicom authorities in November 2005 announced that they were discussing the sale of one of its Pakistani units.

The same month Millicom, reported earnings before tax, depreciation and amortisation of $110.8 million, below the $117.6 million of the same period of 2004 and its shares were 3.09 per cent higher at 150 crowns after the figures.

In January 2006, Millicom International said following high number of unsolicited approaches its board of directors decided to conduct a review of strategic options for the company and appointed Morgan Stanley as financial adviser.

“With the sale of Paktel, Millicom telecom operation in Pakistan started in 1990 has become a history as it has already sold out its shares in Instaphone to local partners,” said the source. He said China Mobile was very much interested in Pakistani cellular market and also attempted to get a GSM licence in an open auction in 2003,” he added.

With more than 250 million wireless customer accounts as of last month, China Mobile is by far the world’s biggest wireless carrier and controls about two-thirds of the mobile market in China. “The move may trigger new kind of competition in the merging telecom markets including, Pakistan,” said the source.

“China Mobile has built one of the most extensive national cellular networks in the world, covering all of mainland China and the company’s strategy clearly shows that its target market is Asia and other emerging telecom markets.”

He said though Millicom’s Pakistan operations was not in a very attractive position, still the country offered one of the best business opportunities to telecom operators, as its most of the rural areas were without basic telecom facilities.

“By December 2006, Paktel enjoyed 1.3 million, which ranked the company at fifth in terms of market share among six cellular operators with total 48.50 million cell phone users across the country,” added the source. He said for China Mobile, Pakistan was among emerging markets, which represented a particularly attractive destination for telecom companies as western markets become saturated.

“In many developing nations, including the fixed-line infrastructure is poor and limited in its range, so cellular networks, which are cheaper to roll out than traditional lines, are used as the primary means of communication,” added the source.

Faisal Chohan writes in.

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Dear All,

Every one has read about the story of Faisal Chohan written by others. I just started writing what has happened with us in the past.

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It was the morning of 5th December, an ideal time to be in Islamabad, the coldness and drizzling made it a wonderful day. I had a few meetings setup with my clients from morning from 10:30 to 1:00.

I woke up a bit late and rushed to office without breakfast. I reached office at 9:30. Spent 30 minutes talking with different colleagues on different project and left office at 10. I accompanied my sales guy and went to a client that was from one of our 3 years old clients. We discussed a few ideas, some new projects and leave the meeting with some new prospects, promised to give him the draft of the work in next 2-3 days. It took around 40-50 minutes.

Then we had a meeting with one more client, that we were trying to get engage for more than 1 year, and now it was our first meeting with the client went well and he agreed for a presentation in the next week.

When I left the office of the second client the drizzling was stopped and it was a nice time to hang around, enjoy the drive to the Margalla hills and enjoy the lunch in Pir Sohawa. But I preferred to go to office to follow-up the clients work.

Around 1:00 PM, I entered the corridor of our office block and was surprised to see the door closed, I thought may be door is closed to avoid the noise of the office besides us that was in construction phase. When I reached in front of office door could sneak through the glass door saw a lot of people inside the office. All the employees sitting at one place, sitting surprised, helpless. I entered the office no body took notice of me, I asked from one of the employees what happened, who are these guys and what are these doing here. They told me my home (I still remember the days when we used to sleep in the office for months) was raided on the offenses that we are using VOIP for making and terminating calls.

I wondered when we did it, or thought, about doing this kind of activity. I asked myself did you spent 16 years of education thinking about negative use of technology? Did you ever earned a single rupee from illegal activities?. The answer was straight no. I could only remember 700 rupees bribe in 4 years of operations . A 2% commission given for getting a cheque after 2 months of completion of work.

Then it was start of the ordeal. It was the start of a tragedy, battle between good and evil. It was start of a show of a proof of strength of unjust, corrupt, false, incompetents in Pakistan versus miserable, young, dynamic, innovative, innocent entrepreneurs in Pakistan.

To be continued…………..

Regards,

Faisal Chohan
CEO Cogilent Solutions
www.cogilent.com

Traditional anti-illegal-termination article from a traditional source. There is no mention of grey traffic being terminated by any of the LDI’s. I suspect that ALL LDI’s, including PTCL, are guilty of grey traffic.

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APP
Saturday, 13 January 2007
ISLAMABAD, Jan 13 (APP): Grey Market Telephony (GMT) is a menace that not only affects rightful revenue of telecom operators but also deprives the national exchequer of handsome amount of Rs. 3 billion every year.

It is a dilemma of all developing countries and telecom regulators around the globe who are striving to find a solution to this problem.

Pakistan Telecommunication Authority (PTA) is fully aware of the situation and has adopted appropriate measures in collaboration with all stake- holders to win the war against grey telephony.

Just to inform the people what is GMT, what are the prevalent reasons of its growth and why it is a source of concern for all of us we should know the basics of Grey Market Telephony.

The main ingredient of grey market telephony which offers a high financial incentive for illegal operators is grey call following a grey route. A call which does not follow a prescribed or authorized route is said to be Grey and the path it follows is called Grey Route.

The question usually arises why GMT is done? the answer to this query is that GMT is done to avail unfair financial advantage and in order to understand the situation, first we will have to know about accounting rate regime.

PTA’s experience shows that the trends of grey market have changed from last few years. Instead of termination on satellite links, VoIP is mostly used these days via DSL.

The other challenge is non-availability of the technical solution for automated detection and hence elimination of grey traffic needs to be tackled.

When contacted, sources at PTA said the Authority is fully aware of the gravity of the situation and has established Vigilance Cell to deal exclusively with issues of grey market telephony.

As discussed earlier, high settlement rates provide incentive to illegal operators to bypass legal gateways. PTA has reduced Accounting Settlement Rates (ASR) by 38.6% during last one year to lessen financial advantage to grey operators and discourage such practices. PTA has issued Policy Guidelines to telecom operators, enabling them to evolve their procedures for arresting the menace at their own level.

Certain directives have also been given to operators which can help in eliminating grey market. PTA has also evaluated several proposals of technical solutions and steps are being taken to acquire technical facility. The Authority has conducted 31 raids during last two years against illegal operators thereby saving millions of rupees. During the raids around 27 illegal operators were arrested. Two cases have been decided while rest are in courts for trial.
The sources said comprehensive measures would be taken with the help of all concerned agencies to eliminate the grey traffic business from the country.