October 2012 - Teletimes

Conflict arises between the Incumbentand Internet Service ProvidersThe Internet market ofPakistan is staging yetanother issue of conflictbetween the PTCL, theincumbent operator and theInternet Service Providers.Before going into the detailsof the present contention, let’sexplore the historic preview.Broadband Internet made itsentry in Pakistan in 2000 whena private operator launchedHFC based broadband servicein Karachi. This was followedby launch of the county’s firstever xDSL service in 2002.In 2004, a comprehensivenational broadband policy wasannounced by the Ministryof IT setting targets for fiveyears. The same very year, theregulator carried out marketde-regulation where a numberof operators acquired wirelessbroadband spectrum throughopen auction.Interestingly, PTCL, theincumbent operator madea quite late entry into theBroadband services startingfrom the launch of its xDSLservices 2007. This longawaited entry by the PTCLdid brought several attractiveoffers for the subscriberssuch as increase in broadbandcoverage, massive reductionin broadband prices andimproved competition.The country observed anotherBroadband jump when wirelessbroadband services were madeavailable in the last quarter of2008 primarily over WiMAXtechnology. Here again, theincumbent operator awaitedfor observing some marketmaturity and launched adifferent wireless broadbandtechnology, EvDO (Evolution-Data Optimized) in May, 2009.This introduction gave a furtherboost to broadband marketshowing a rapid adoption rateover the past 4 years or so.PTCL with its position asincumbent operator holdingthe primary position fornetwork infrastructure ispresently holding the SMP(Significant Market Power)status for Broadband serviceswith 827,000 xDSL and 435,000EvDO subscribers, a total sumof around 1,250,000 broadbandcustomers in a total countrymarket of around 2,100,000subscribers.Soon after the introductionof ist xDSL service, PTCL waspointed out for showinganti-competitive behavior anddenying the rights of privateInternet Service Providers(ISPs) to install broadband DSLconnections to their customersover PTCL’s copper linenetwork.In response to this Industrycomplaint, the regulatorreleased a mutually finalizedStandard Operating Procedure(SOP) for broadband servicesand Service Level Agreement(SLA) for Broadbandbandwidth provision in August2007. However, the InternetService Provider Association(ISPAK) continued to complaintover their rights stating thatPTCL while operating its ownretail broadband DSL servicesis creating intended delays inBroadband connections of itscompetitor ISPs.The present contentionbetween the industry and theincumbent appeared in 2011revealed by ISPAK that PTCLis illegally using the scare3G spectrum for its wirelessbroadband services advertisedas Evo Nitro by occupying40 percent extra band ofspectrum, not originallyallocated to it by the regulator.“This anti-competative and illegal commecialpractice by the incumbent operator is consideredas slashing the investment made by privateoperators. The operators are of the view that inthe long run PTCL will make their survival moredifficult by pushing the market back into a stateof monopoly.”In response to the complaint,Frequency AllocationBoard (FAB), the nationalbody for enforcing use ofwireless spectrum verifiedillegal use of spectrumby PTCL. SubsequentlyPakistan TelecommunicationAuthority after conductinga series of hearings issueda determination againstPTCL stating that PTCL wasallocated frequency band of1975-1980 MHz and 1895-1900Aslam MumtazMHz for use of its CDMA/WLLservices. However, PTCL wasusing 1975-1981.875 and 1895-1901.875 MHz thus occupyingextra 3.75 MHz of band notoriginally allocated to them.A sum amount of PKR 82.496million was imposed as a fineon company by PTA for allegeduse of extra radio frequencyspectrum for its Evo Nitroservice.The determinations waschallenged by PTCL obtaintinga temporary stay order inNovember 2011. Accordingto PTCL, it has been usingfrequency spectrum in the450MHz, 3.5GHz and 1900 MHzbandwidth allocated to it in2004 through open auctionprocess. The spectrum is legallyowned by PTCL and all theservices the company providesare within that frame work.This anti-competative and illegalcommecial practice by theincumbent operator is consideredas slashing the investmentmade by private operators. Theoperators are of the view thatin the long run PTCL will maketheir survival more difficult bypushing the market back into astate of monopoly.The matter may also bereferred and intervened byCompetition Commission ofPakistan to stop the anticompetitivepractices ofPTCL and impose penaltiesfor violating the CompetitionOrdinance, 2009. Theseconflicts between the industryand incumbent operator is alsocausing a state of fright amongthe broadband subscribers ofPakistan.October 2012www.teletimesinternational.com59