ISPAK Internet Service Providers Association of Pakistan



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On 18 October 2008, PTCL launched free dialup Internet service for all its telephone customers. The decision was proving to be a final nail in coffin of ailing ISP industry which in past has witnessed many onslaughts, predatory pricings anti-competitive moves from the state owned incumbent (now partially privately owned), PTCL.

ISPAK approached the regulator, PTA and hearings were held wherein PTA  desired to formulate a long term model for betterment of all stakeholders, PTCL, ISPs and the Internet users.


  • Exemption from Local Calls Multi-metering 

  • It was in May-June 1998, when Government and PTCL decided to implement multi metering of local calls. Before that, local calls were charged un-metered at cost of one call regardless of their duration. Internet which was in infancy during those days was threatened by this move. ISPAK launched a mass awareness campaign and convinced the Government authorities not to put this additional burden on the Internet users. So PTCL went ahead with the voice call multi-metering (one call to be charged after every five minutes) but upon Government directions announced in the Budget 1998-99, Internet calls were exempted from multi-metering. PTCL within 15 days implemented a new hunt group system for all ISPs starting with 131 xxxxx on which local calls were not metered. This decision acted as a major catalyst in growth of the Internet in Pakistan in subsequent years.

  • Exemption from Central Excise Duty on Internet and Leased Data Circuits 

  • CBR vide its SRO No. 455(I)/96 dated 13 June 1996 imposed 40% CED on telecommunication services defined as telephone, telefax, telegraph and alike services. This duty was reduced to 25% w.e.f. 01.01.1997. In 1998, Central Excise Department issued notices to all ISPs in Pakistan to abide by this SRO. ISPAK again took up this matter with Central Board of Revenue (CBR), Minister for Information and Media Development, Minister for Finance, PTA and other relevant authorities. The Government then took a decision to exempt Internet from CED and leased Internet circuits were also exempted from CED. Later on, CBR converted CED into General Sales Tax but Internet Services and international leased data circuits are still exempted from GST.

  • Permission to Operate Simplex Satellite Services

  • In 1998-99, simplex satellite Internet services (receive only) were introduced in the region by some service providers like Zaknet. ISPs started using these services as costs of PTCL leased lines (IPLCs) were prohibitively high. But PTCL started harassing ISPs by conducting raids and shutting down the operations of ISPs who were using simplex satellite services. ISPAK took up this matter with PTA and Ministry of Communications with full protest and threatened to go on a strike with all ISPs of the country shutting their operations. Upon intervention of the Secretary, Ministry of Communications and PTA, immediate written orders were issued by PTA to restore the services of AKNet in Lahore and disciplinary proceedings against PTCL officials responsible for shutting down the ISP were initiated.

    The IT Policy 2000 of the Ministry of Science & Technology (IT & Telecommunications Division) approved by the Cabinet has finally given proper legitimate status to simplex satellite services in Pakistan.

  • Reduction in Royalty on Internet 

  • PTA used to charge 4% of the gross revenue of ISPs as royalty. Keeping in view the low turnover and market of the Internet, this amount was too high. ISPAK made numerous presentations to PTA and Ministry of Science & Technology to reduce this royalty but in vain. Finally ISPAK moved a writ petition in the Rawalpindi Bench of Lahore High Court challenging the legal status of royalty charged by PTA. This was the first ever litigation against the national telecom regulator by the industry stakeholders. PTA, upon written instructions from Deputy Attorney General of Pakistan went into negotiations with ISPAK and made an out of court settlement according to which, royalty was reduced to 0.66% of the gross revenue for ISPs. This came another milestone in the development of Internet in Pakistan.

  • Formation of a separate Ministry of IT & Telecom

  • Before year 2000, the subjects of Information Technology, Internet and Telecommunications were dealt by the Ministry of Communications which has so many other departments to look after like national highways, ports and shipping, postal services, etc. The IT industry felt that this new and dynamic subject handled by a conventional Ministry was too neglected by the Government. Numerous representations and proposals by made various stakeholders including ISPAK to the Government to create a separate Ministry of IT. The then Chief Executive of the country, Gen. Pervez Musharraf, through an executive order in March 2000, created a new Division named IT & Telecommunication Division under the Ministry of Science & Technology and moved the telecom subject from the Ministry of Communications to this newly created Division. An eminent scientist, Prof. Dr. Atta ur Rahman was appointed as the Minister for Science & Technology who with his dynamic leadership brought profound reforms in the IT & Telecom sector of the country in a short period of time. In 2003, a new Ministry of IT & Telecommunications was created by the Government of Pakistan be separating IT & Telecom Division from the Ministry of Science & Technology.

  • Participation in the National IT Policy 2000

  • ISPAK actively participated in various Working Groups whose reports led to the formation of the first even IT Policy of Government of Pakistan approved by the Cabinet in September 2000.

  • Exemption from Customs Duty on Networking Equipment

  • ISPAK took up the matter with the Ministry of Science & Technology for duty free import of IT and networking equipment. Initially computer equipment was allowed to be imported on zero duty but custom authorities were not allowing duty free import of networking equipment such as routers, hubs, access servers, servers, etc., treating them as telecom equipment. After a long battle, CBR made amendments to HS Codes and included new Chapter 99 in the Custom Tariff Manual which included all the IT and networking equipment at zero import duty rates.

  • Exemption from GST on Networking Equipment

  • Customs authorities were charging GST on the networking equipment treating it as telecommunication equipment. ISPAK took up the matter with the Ministry of Science & Technology and with personal interest of the then Minister, Dr. Atta ur Rahman, CBR issued SRO exempting the networking equipment from General Sales Tax.

  • End of Cross Subsidy of Paknet and Separation of Accounts

  • Paknet was initially working as a Division of PTCL with joint accounts whereas it was competing with other ISPs in the market. PTCL offered many services to Paknet free of cost and other private sector ISPs were at disadvantage. ISPAK took up the matter of cross subsidization of Paknet by PTCL with PTA and pleaded the case as this was a violation of Pakistan Telecommunication (Re-organization) Act, 1996. After lot of efforts spreading over 2 years, Paknet was transformed into a separate public limited company, 100% owned by PTCL, with separate accounts and PTCL started charging for its services to Paknet which previously went unaccounted.

  • Deregulation of Store and Forward Fax

  • ISPAK took up the matter of permission to ISPs for operating store and forward fax over Internet and PTA finally allowed this to be offered as a separate service by the ISPs.

  • Reduction in IPLC prices

  • The first task that Prof. Dr. Atta ur Rahman undertook after taking oath as the Minister for Science & Technology in March 2000 was the reduction in IPLC prices of PTCL. After having a series of meetings with ISPAK and PTCL, Dr. Atta ur Rahman announced upto 53% reduction in the IPLC prices reducing them from $$ 32,250 plus Rs. 219,000 per month to $ 20,000 plus Rs. 55,000 per month.

    The sub rate factor to work out the cost of lower multiples of 2 Mbps previously set at 11.93 was changed to 16. This provided substantial relief to small and medium size service providers operating in low bandwidth ranges of 64, 128, 256 kbps, etc. The DXX (digital cross connect charges) which were previously at Rs. 219,000.00 per month would were changed to a flat rate of Rs. 55,000.00 per month for data rates of 192 kbps.

  • Provision of Free Internet Accounts to Universities

  • Internet with its massive repository of knowledge and potential benefits is a must for educational institutions. Unfortunately in Pakistan, many Universities are without Internet access. To provide immediate relief, while larger plans were under consideration of the National IT Task Force, ISPAK, under a commitment with the Ministry of Science & Technology, provided free dedicated Internet connections to the Universities and Educational Institutions selected in consultation with the University Grants Commission. PTCL provided the last mile connectivity for delivery of such access. The speed of such connections was from 33.6 to 128 kbps for 24 hours unlimited use and every ISP provided connectivity to one institution at a minimum, depending upon the size of bandwidth the ISP was obtaining from PTCL. This practice continued until recently when Universities were provided Internet bandwidth by the Government funded Educational Intranet and Pakistan Educational Intranet Project.

  • Exemption of Obtaining No Objection Certificate (NOC) or Type Approval Certificate from PTA on Import of Networking Equipment

  • Two years back in 2003, Director (Standards) PTA issued a letter to Chief Customs (Tariff), CBR in which PTA, under the guise of Pakistan Telecommunication (Re-Organization) Act, 1996, has instructed the customs authorities not to release the Terminal Equipment including the IP devices such as Routers, Remote Access Servers, Switches, Bandwidth Controllers, Firewalls, IP Telephony Gateways, etc., without Type Approval or NOC from PTA. On the basis of this letter, the Pakistani IT industry has been continuously suffering by the hands of customs authorities as they always ask the importer to get an NOC or Type Approval Certificate from PTA for release of the equipment from customs. According to the Clause 28 of Pakistan Telecommunication (Re-Organization) Act, 1996, the Authority shall not restrict the type of telecommunication equipment that may be used for the establishment, maintenance or operation of telecommunication systems or the provision of telecommunication services. The Act also states that Terminal Equipment to be connected to PSTN (public switched telephone network) should be approved by the PTA as Section 29(3) states that 'no person may install any telecommunication equipment as part of, or connect terminal equipment (other than by a plug-into-socket connection) to any public switched network except in accordance with regulations made by the Authority. On the basis of this, ISPAK submitted a petition to PTA stating that this equipment was categorized as CO (central office) equipment and normally installed in network operation centers. The Section 29(3) of the Act also clearly exempts the plug-into-socket connection type devices from Type Approval and such devices include all type of phone sets and even modern fax machines. ISPAK informed PTA that this letter of PTA, besides violating the Section 16 (2) of Pakistan Customs Act, 1996 and Import Trade Order and Procedures Order 2001-2002, has added the insult to the injuries of Pakistani IT industry which already faces a lot of difficulties and delays by the hands of customs officials in import of hardware and software. Many leading Call Centers in recent past have faced similar problems in import of the IP Telephony equipment. The Pakistan Customs Act, 1969 neither prohibits the import of telecom equipment into country nor provides infringement cover to Pakistan Telecommunication (Re-Organisation) Act, 1996. The Imports & Exports Act, 1950 and its subsequent revisions from time to time also do not give any powers to PTA to restrict the import of the telecom equipment into Pakistan. ISPAK further informed that PTA also did not have any statutory powers to ask CBR to restrict the import of legitimate equipment that has not been restricted by the Competent Authority, i.e., Ministry of Commerce, as defined in the Import Trade Order and Procedures Orders issued by the Government of Pakistan every year. Upon ISPAK request, Chairman PTA issued instructions to immediately withdraw the aforesaid letter resulting in hassle free import of IT equipment.

  • Peering Bandwidth

  • Due to increase of domestic Internet traffic within the country, market demand for local peering service was generated considerably. Under the then prevailing arrangements, the PIE customers accessing domestic web servers or e-mail servers had to pay the same charges which they were paying for international access. The PIE tariff included the rental for both international as well as domestic connectivity. There is was peering arrangement available for the exchange of domestic traffic. Due to increase in the domestic IP traffic, a pressing demand from the PIE customers, i.e., ISPs and the IT industry for providing peering facility for exchange of domestic IP traffic at lower tariff was submitted to Ministry of IT & Telecom and PTCL. At that time the domestic traffic on PIE was about 2% of the total traffic and had an upward trend. Furthermore a bulk of e-mail and web traffic of the large ISPs was routed locally without utilizing international links of PIE. Provisioning of peering arrangements was to facilitate these customers to exchange such domestic traffic on economical rates. PTCL approved the policy for Peering Bandwidth links in 2003.

  • Compensation to ISPs for PTCL's Service Outages in 2002

  • The then PTCL's Internet backbone in Pakistan, the famous STM-1 (155 Mbits link) of PTCL faced severe breakdowns and outages for weeks in 2002. It was revealed that during these outages, the sub marine optic fiber cable, SMW3, on which STM1 was carried, was not damaged even once enroute from Karachi to London during that period. The customers who have obtained IPLs from PTCL on SMW3 didn't face any outages during the same period. So, it was obvious that the outages on STM1 IP link were purely due to the fault of the foreign service provider to PTCL, that was, Singtel. Initially, PTCL claimed that since the SMW3 cable was damaged, they couldn't do anything till the physical restoration of cable. This was totally a baseless excuse given by PTCL as SMW3 was not damaged on the Karachi-London route even once during last many months of the outages period. This was verified from international media and web site of SMW3 ( where all outages on the cable were promptly reported. PTCL then confessed that the problem was with the international service provider, which could be purely a routing issue, local loop or cross connect problem in Europe, etc. ISPAK escalated the level to the Minister for IT & Telecom who after a series of meetings and negotiations, ordered PTCL to compensate ISPs for the poor service provided during that period. This was first ever compensation paid by PTCL to any of its customers in its history of over 50 years. Ministry also orderd PTCL to sign Service Level Agreement with its backbone providers and also with its customers, i.e., ISPs.

  • Compensation to ISPs for Service Outages due to DOS and DDOS Attacks in 2003

  • PTCL's IP backbone suffered severe degradation in service quality in May 2003 due to DOS and DDOS attacks resulting in crippling of Internet across the country. ISPAK fought for the rights of ISPs and after a series of negotiations and directives from Ministry of IT & Telecom, PTCL agreed to compensate ISPs for loss of business for 30-40 days period.

  • Amendments in EIS License

  • The Electronic Information Services License included many restrictory and discriminatory clauses. ISPAK took up the matter with PTA and the clauses were removed by PTA resulting in issuing of new Class Value Added Service (CVAS) Licenses to ISPs.

  • First Time Tendering of STM1 circuits by PTCL

  • PTCL used to purchase its IP bandwidth without competitive bidding resulting in costly and inferior quality of service for the ISPs. ISPAK purusued the matter with PTCL and Ministry of IT that resulted in open international tendering by PTCL for purchase of IP bandwidth. The results were very clear ' prices of PTCL's bandwidth reduced drastically and service levels improved to a great extent.

  • Bandwidth Availability on Eastern Side of SMW3 by PTCL for Redundancy

  • PTCL used to purchase IPLC and IP bandwidth only on Western Segment (towards Europe) of SMW3 with no redundancy. Upon persistancec from ISPAK, PTCL started procuring bandwidth on Eastern Segment of SMW (towards Singapore, Malaysia), resulting in redundancy and better quality of servicec for its customers.

  • Preparation of SLA for PTCL's Upstream Service Providers

  • Upon request from PTCL, ISPAK prepared a draft SLA that formed part of all contractual documents of PTCL in procuring IP bandwidth from its upstream providers. Under the SLA, the upstream providers of PTCL were forced to improve their quality of service, reduced latency and zero packet loss in IP backbone.

  • Web Filtering RFP

  • Upon request from Ministry of IT & Telecom and PTA, ISPAK prepared a draft RFP for the PTCL, PTA and Ministry to implement a mechanism to filter pornographic content on the Internet without compromising the quality. The project however could be never implemented by the Minsistry of IT, PTA and PTCL.

  • Strategy for DOS and DDOS Attacks

  • During the period of DOS and DDOS attacks in 2003, ISPAK experts helped the PTCL in preparing a comprehensive strategy for mitigating threat of DOS and DDOS attacks. After implementation of strategy recommendations by PTCL, Internet backbone of the country was comprehensively protected and never faced a similar disastrous like situation since then.

  • Shifting of ISP Links to FLAG without any Cost

  • Upon escalation matter of poor quality of service during the DOS/DDOS attacks, PTCL agreed to ISPAK demand of shifting the IP links to FLAG network without any extra cost.

  • Preparation of FLAG SLA

  • ISPAK prepared a draft SLA for PTCL which was made part of O&M contract between FLAG and PTCL to govern the quality of IP backbone service provided by PTCL thrugh FLAG's Virtual POP in Karachi.

  • Provision of one free of cost E1 to ISPs for establishing POPs in smaller cities and towns

  • Implementing an ISPAK proposal to encourage ISPs to establish POPs in smaller cities and towns, PTCL agreed to provide E1 media on its optical network free of cost to ISPs. PTCL thus benefited in reduction of Internet traffic on its long haul network under Universal Internet Access scheme and ISPs benefited from free E1 media.

    Facility to Deposit one months advance and one months security instead of three months deposit to PTCL for IP Leased circuits Provision of STM1 media between PIE POPs at Karachi, Lahore and Islamabad

  • Satellite Backup for Call Centers

  • Economical, multiple and redundant international connectivity is considered a basic requirement for successful operations of any call center. Working closely with Call Center industry, PSEB and Ministry of IT, ISPAK played an instrumental role in chalking out nitty-gritty details for the policy framework of provision of free satellite backup for call centers and and its implementation. Call centers of the country continued to benefit from this policy of the Government till SMW4 got commissioned in December 2006.

  • PTA Determination on Unblocking on Net2Phone web site and similar services

  • Action Against PTCL officials for negligence causing 16 hours outage in SMW3

  • On ISPAK demand, the Minister for IT & Telecom ordered an inquiry into the 7 July 03 outages and initiated disciplinary action against the responsible officials of PTCL who took 16 hours to locate and repair the faults on SMW3 terrestrial part and satellite earth station, Karachi.

  • Service Level Agreement

  • After successful negotiations and pursuance of efforts spread over a period of three years, ISPAK made a landmark achievement by signing telecom industry's first ever Service Level Agreement with PTCL in 2003. The historical event was chaired by the Minister for IT & Telecom and participated by PTCL and ISPAK.

  • Collocation Policy

  • PTCL used to charge very high rental charges for its collocation facility. ISPAK filed a reference in PTA and after efforts of over one year, succeeded in signing an agreement with PTA and PTCL according to which, PTCL charges of collocation were reduced many times. The same collocation rates are still being followed by PTCL as part of its Reference Interconnect Offer (RIO) with private telecom operators.

  • Bulk Bandwidth Rates of PTCL

  • To promote broadband in the country, ISPAK closely worked with PTCL to get the new and reduced rates of bulk bandwidth implemented thus facilitating the ISPs to reduce their input costs of bulk bandwidth of 8, 16, 34 and 155 Mbits.

  • Technical Network Audit of PTCL and RFP Preparation

  • Upon recommendations of ISPAK, PTCL through an international consultancy firm carried out first ever technical audit of its IP network to identify weak points and bottlenecks. As usual, ISPAK provided valuable inputs to PTCL which formed a part of its RFP and contract with the consultant.

  • 50% reduction in licenses for Balochistan by PTA (under developed territory)

  • NMS, toll free numbers and cel numbers for PTCL officers

  • Permission from State Bank for remittance on easy terms

  • PTA, License fee reduced from Rs. 500,000 to Rs. 300,000 for one big city and Rs. 100,000 for small cities.

  • Inputs for Telecom Deregulation Policy 2002

  • Provision of E1s on SDH without DXX

  • Recruitment of High quality manpower in ITI, PTCL

  • Waiver of $3,000 installation charges for each 2 Mbits upgrade

  • Provision of domestic E3 media for 16 Mbits and above FLAG circuits

  • Bandwidth Monitoring for ISPs (MRTG) Facility by ITI

  • Preparation of RFP for VSAT Connectivity for Call Centers

  • Rationalization of 10, 12 Mbits and higher IP Bandwidth Rates

  • Filing of Reference in PTA on Cross Subsidization of Paknet by PTCL

  • Cogilent Case Struggle for Freedom

  • PTA/FIA conducted a raid on an Islamabad based software company, Cogilent Solutions and arrested its CEO, Mr. Faisal Chohan on 05 December 06. ISPAK has thoroughly investigated the case and concluded that the company was not involved in any illegal voice termination/origination service based on the following facts:

    1. Cogilent had only 4 PSTN lines (3 phones and one fax) from PTCL and their monthly bills of last one year don't indicate any calls other than their normal office use.
    2. Raiding team couldn't find any GSM gateway/s or SIMs in Cogilent's office premises.
    3. There is no evidence of A or B Tel numbers from the logs servers confiscated by the raiding team.
    4. Record of Cogilent's DSL connection from its DSL service provider doesn't indicate any abnormal use or pattern typical of regular or commercial VOIP activity. They've utilized on average of 10 Gbyte of data per month (upload + download) which is very normal for regular Internet use only.
    5. Cogilent however did make few (not exceeding 20) PC to phone overseas calls every month using Internet but these calls are perfectly legal as per PTA's Determination of December 2002.
    6. ISPAK teams had series of meeting with the Chairman PTA, Minister for IT and senior FIA officials. Finally, upon directives of Minister for IT, PTA withdrew the case against Cogilent and Faisal was released from prison.

      Click here for Jawwad Farid’s writeup on Faisal Chohan saga

  • Amendments in SRO 550(I)/2006 dated 5 June 2006 on abolishment of CED/GST on leased data circuits and DSL loop sharing charges

  • PTA Determination on Reduction of Internet bandwidth prices.

  • 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. ...Read More

  • PTA’s Blocking of Call Centers Voice Ports and subsequent Reopening

  • 03 June 2008 ISLAMABAD: Once again, country’s call center industry has been badly hit by an order from Pakistan Telecom Authority (PTA) directing the Internet bandwidth providers to block the voice ports. The orders came over the weekend and implemented by the country’s second largest IP backbone provider TWA, giving little time to the call centers to provide necessary documentation to the authorities to enable voice communication. The largest Internet backbone provider, PTCL, has already been blocking voice ports for all of its customers for last many months. ...Read More