ISPAK Internet Service Providers Association of Pakistan

 

 
 

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450-700% Increase in PTCL’s Domestic Leased Data Circuit and subsequent withdrawl 

On 25 June 2008, PTCL announced an unprecedented 450% increase in domestic leased lines for Internet and Data Services. According to a Tariff Circular No. DD(Tariff)064/2005/PLC issued by PTCL Headquarters on 25 June 2008, the new rates effective from 01 July 2008 for 2 Mbits circuit would be Rs. 7,871/km/year as opposed to existing charges of Rs. 1,750/km/year, depicting 4.5 times increase. Similarly, rates for higher capacity circuits of 34 Mbits have been increased from Rs. 21,000/km/year to Rs. 140,607/km/year showing 700% increase. PTCL, being the largest fixed line operator, controls almost 100% of the optical fiber circuits within cities and ISPs and broadband operators are major customers of these links. The broadband industry of the country would be worst hit with this increase as PTCL’s circular sent shock waves among ISPs. Ironically, PTCL circular reads “PTCL management is pleased to announce the reduction in the domestic leased lines..” but a comparison with previous tariff circular of 10 January 2007 indicated no reduction but huge increase in almost every slab. Criticizing the move, a spokesman of Internet Service Providers Association of Pakistan (ISPAK) termed it as highly anti-competitive and anti-customer. “PTCL is all out to kill competition by hook or by crook” said Wahaj us Siraj, Convener ISPAK while talking to The News. “Where PTCL faces competition, it decreases end user rates to under-cut other operators and where it enjoys monopoly, it increases the rates to drive competition out of business”, said Mr. Siraj. Internet industry of the country has not witnessed any growth during last five years despite lot of publicity by the Ministry of IT and planned funding the broadband initiatives by the Universal Service Fund (USF). “Historically, PTCL voice leased line charges were higher than data circuits but the new data circuits rates have surpassed the voice circuits rates” said Naeem Haq, CEO of Nexlinx. “This would literally mean killing of all ISPs and shifting of all broadband users to PTCL’s network, thus strengthening monopoly and leaving no choices for customer”, said Mr. Haq. Mr. Sikandar Naqi, Senior Executive Vice President of PTCL, when contacted by The News, offered no comments as he was not aware of this move. He however said that if a circular had been issued, PTCL management must be aware of this. This action of PTCL is specifically aimed at driving all broadband operators out of business and we demand immediate action by the telecom regulator, PTA, to stop strong arm tactics of PTCL” said Mr. Siraj of ISPAK. When contacted by The News, Member Telecom of Ministry of IT (MOIT), Mr. Noor ud Din Baqai, said that the move would be a suicide for PTCL under current market conditions and the Ministry, being principal shareholder of PTCL, would definitely probe the matter. If PTCL’s move go unnoticed by the PTA and MOIT, five million Internet and broadband users of the country would be expecting almost 100% increase in the end user Internet rates within next few days.

ISPAK sought immediate intervention of PTA to curb the exorbitant price hike by PTCL in domestic Internet leased line circuits. In a complaint to Chairman, Pakistan Telecom Authority (PTA), ISPs stated that price increase by PTCL in its leased line data circuits was discriminatory, anti-competitive, unlawful and hence needs confiscation. Last week, Pakistan Telecommunication Company Ltd. (PTCL) announced an unprecedented 450% increased in domestic leased line data circuits primarily used by the ISPs. Internet Service Providers Association of Pakistan (ISPAK) in its letter, stated that PTCL has not increased the retail charges of its leased circuits for its direct customers and rather increased wholesale charges by many folds. It said that PTCL was trying to create a monopoly, depriving customers from competitive choices and driving competition out of market using unfair means, which is unlawful and negates Telecom De-regulation Policy and Pakistan Telecommunication (Re-organisation) Act, 1996. ISPs, already bitter on PTCL’s strong arm tactics, have cautioned their customers to be ready for almost 100% increase in retail Internet and broadband charges if PTCL’s tariff circular of 25 June 2008 is not withdrawn. ISPAK maintained that PTCL has blatantly flouted the decision of apex telecom regulator, PTA, by not implementing its earlier Determination of 6 October 2006 and not obtaining its prior approval before announcing the new rates. ISPAK pleaded to PTA that since PTCL has not increased the charges of its voice leased circuits, is was patently clear that PTCL’s current move was specifically targeted at killing ISPs/DSL operators. PTCL wants to make its own DSL broadband service successful at the cost of all ISPs of the country, said ISPAK letter. Sources said that PTA was quite upset on the move of incumbent and a restraining order from PTA to PTCL would soon be forthcoming. Wahaj us Siraj, Convener ISPAK, while talking to The News said “we’ve submitted the case to PTA and we’re hoping urgent relief”. If nothing moves, then we would announce further course of action, added Mr. Siraj.

On 02 July 2008, PTCL announced that it has withdrawn the controversial circular of price increase in domestic leased line circuits used for Internet and data services. A press release issued by PTCL said “keeping in view the manifold increase in cost of service provisioning by PTCL and similar pressures faced by our valued ISP and DNOP customers and in consultation with PTA, PTCL being a socially responsible organisation has withdrawn its decision for price rationalization and will serve the ISP and DNOP customers at the earlier rates”. Last week, PTCL announced 450-700% increase in prices of its domestic leased line circuits and the move invited sharp criticism from the ISPs and Internet users. ISP Association of Pakistan (ISPAK) assailed the move terming it unlawful, anti-competitive and appealed to Pakistan Telecom Authority (PTA) for immediate action against PTCL. Source said that PTA held closed door consultations with PTCL and asked the operator to withdraw the unilateral price increase as Ministry of IT, the top IT and telecom policy making body, watched silently over the fence . Spokesman of ISPAK, Mr. Wahaj us Siraj, while talking to The News said “we appreciate the decision of PTCL management to withdraw the price increase which could have led to doubling the prices of Internet for the customers”. ISPs were to be worst hit by the increase as they are the major customer of PTCL’s optical fiber leased data circuits. “It is good that both PTCL and PTA realize the importance of Internet for economic growth of the country and we hope that they would work for increasing the broadband penetration in the country”, said Mr. Siraj. The decision would bring a sigh of relief to five million Internet users of the country who were fearing another price hike in shape of “Internet Bomb”.