April 3, 2004

Lately, we have seen our government’s determined resolve to making telecom facilities more accessible for the public.

Towards the end of 2003, the Pakistan Telecommunication Company Ltd announced further cuts in nationwide dialling (NWD) charges for cities within the 120km radius and substantial decrease in urban connection charges. After these reforms, there were expectations that the Pakistan Telecommunication Authority would take similar steps to regulate the mobile telephony tariffs too. However, the interest of the authority was more inclined towards introducing new operators into the mobile telephony market and to let the competition decide the tariff issue.

The mobile market has shown that despite the four existing operators, the overall effect on mobile tariffs has been quite negligible in the past. Telecom pundits say that the tariff issue has been left untouched to attract the new operators who may loose some of their interest if the mobile tariffs were clamped at this point in time. Although this notion carries weightage, it goes without saying that the primary concern of mobile phone users lies in the tariffs and quality of service. Mobile telephony cannot truly flourish unless people use their services optimally and are not discouraged by the cost constraints. We review some of the major cost issues concerning mobile telephony and briefly review the upcoming mobile policy on how it addresses mobile phone user’s concerns.

Cost issues: Right from the word go, mobile telephony is riddled with exorbitant charges that make it a very expensive utility. Gone are the times when keeping a mobile phone used to be a luxury, they are now a part and parcel of modern lifestyle — something that cannot be done without.

Connection charges: New mobile connections are still heavily taxed at Rs2000. Although mobile companies have taken a credible step and minimized connection charges over this taxation limit, nevertheless this excessive tax needs to be revised immediately.

Whereas the government has subsidized conventional telephony in urban areas, a reduction in the connection charges of mobile phones would serve a much better purpose as they are free of the terrestrial connectivity limitations of landline phones.

A reduction of at least 50 per cent in these taxes would encourage people to buy more connections and also help the new operators in obtaining clientele.

Interconnect & call charges: A very ironic case of mobile call charges is the discrepancy in rates of a call taking the same route. A call made from a landline telephone to a mobile phone costs Rs3.50 irrespective of the network at which the call terminates. A portion of this tariff is shared between the mobile operator and PTCL. On the other hand, if a call is made from the network of the same operator to that of PTCL landline phone, the charges are exceptionally high as operators charge up to six rupees plus an additional two rupees for a call to a PTCL number. With the taxes included on the calls, the net cost goes up to Rs9.00 (package dependent). The case for one mobile operator to another has similar charges.

It is highly illogical that for the same call route, a landline originating call costs substantially less than one that originates from a mobile phone — this fails all logical explanations.

A similar dilemma exists for nationwide (NWD) or international direct dialing (IDD) scenarios for calls originating from mobile phones. Mobile operators levy separate charges for nation wide network access, per minute call charges, PTCL airtime call charges and interconnect charges — all combined, make nationwide mobile call rates equivalent to making international calls from a landline number.

The interconnect charges and the various other charges levied on calls make mobile phones a highly undesirable medium for outgoing calls and people on moderate budgets prefer to use it for receiving calls only — this is detrimental to the proper growth of the mobile telephony.

To ease the customers further, the call charging format needs to be brought down to a per second or per ten second basis. Currently subscribers are charged a full minute even if they exceed a second into the next minute during calling. Considering the excessive per minute charges that already charged, such an arrangement would considerably control call charging.

Additional taxes: Mobile telephony is riddled with taxes. Taxation does not end at connection taxes and call taxes. An additional 5 per cent tax is levied on all prepaid scratch cards and also adjusted on postpaid numbers. Even outgoing SMS is taxed at a similar rate! The excessive taxation is hence adversely affecting cellular phone usage. The government should consider withdrawing or reducing some or all of these to create a favourable environment for cellular growth.

Security deposits: Security deposits are by far the worst exploited charge by the mobile companies. Mobile companies prefer post paid connections due to the large amount of money they bring in as security deposits. This amount inflates the accounts of cellular companies, allowing them to earn greater interests on their capital.

Since mobile connections are usually not closed down, these security deposits form a permanent capital for the company. Although having security deposits on postpaid connections cannot be ruled out to ensure the payment of phone bills, the problem starts with the predefined limits that mobile companies have kept on various categories of connections (local, NWD, IDD and international roaming). The lower limit on such security deposits should be immediately withdrawn and left to subscriber discretion and his planned usage. There is no logic in having a security deposit of Rs4000 for a subscriber whose monthly bill never exceeds a thousand rupees!

Miscellaneous charges: A host of other charges that go unnoticed make conditions tough for subscribers. These include connection reactivation charges, SIM replacement charges, connection transfer charges, changing number (city) charges, international SMS surcharge, etc. These charges do not justify the cost that occurs to the company in providing these services to the client. The cost in many cases is quite negligible and cause undue burden to the customer.

Quality of services
The quality of services has remained a major issue causing many hardships for customers when even in major cities they are unable to get proper services in terms of strength of signals and network congestion. The mobile policy, however, inadequately addresses this issue through the clause: “The Mobile Cellular Licensee shall within three months from commencement of public services publish a Customer Charter, to be approved by the PTA. The Customer Charter should provide commitments by the Licensee to Customers in respect of the standard and quality of the Licensed Service, including an undertaking to make payments or other recompense to Customers if the Licensee fails to meet its commitments in the charter.”

The PTA needs to lay down some firm regulations with regards to quality. In the past some good measures have been taken by issuing warnings and a clamping a monetary fine on a cellular company for its poor service, but the effect has been negligible as much is left to be desired in the quality of service even by the same operator. To ensure top service, the authority should set an optimal limit to the maximum number of customers a company can take in ratio to the available circuits it has on its network. Once the capacity is reached, it should not be allowed to take any more customers unless up gradation is done.

Similarly a minimum strength of signals should be made a prerequisite for an operator to provide its services in any region. This signal strength should be such that any subscriber can comfortably talk internally in the region that the services are offered. If the operator is unable to provide these satisfactory services after a probation period, it should be penalized by a suspended license for that region. Such measure will ensure proper services as previously GSM operators could not carter to this standard making it impossible to converse on their networks.

The aim of the government should be to facilitate the subscribers to the maximum in order to promote mobile telephony in Pakistan. If people have access to cheaper services comparable to landline telephones and an appreciable quality of service then only will they be able to properly utilize this technology, instead of fretting about their budgets over every second they use the service. Cheaper and good quality services will ensure that more people avail them and an increased use will definitely increase the revenues of the companies involved. Once this culture is ushered in, the host of other services like GPRS, MMS etc that come along with mobile technology will gain their due popularity. One hopes that the government will take some urgent steps to address this core problem of mobile phone usage.

Issues with the upcoming mobile policy
Some time ago, the ministry of IT& T issued a draft cellular policy to streamline the issues of mobile companies. Some of the proposed clauses drew immediate criticism from the mobile operators who claimed that an undue advantage has been given to new operators entering the market. Overall, the new independent mobile communication policy drafted by IT and Telecommunication Division has created a great scope for the new and existing mobile telephone companies to invest in this sector, but one wonders whether the new cellular mobile policy is pro-mobile operators or pro-customers.

As reported, initially the proposed policy had introduced the concepts of national roaming, infrastructure sharing and number portability as an obligation on existing and new cellular mobile licensees to increase competition, but due to strong pressure from existing operators the PTA is liable to make changes to these proposals.

Exemption of infrastructure-sharing clause has posed the threat of overcrowded mobile towers in the cities after more operators enter the market Proliferation of towers is being increasingly seen as environmentally unfriendly and destroys the skylines in cities.

In order to minimize number of towers, mobile regulators in developed countries were making sharing of existing towers by more than one mobile operator mandatory. But in this case one point to be taken into account is that in the West there are independent companies that build and provide infrastructure for the telecom sector only and then these companies lend their infrastructure on a commercial basis to the telecom operators. But the local scenario is somewhat different - in our country everything is to be done by the operators themselves and that is where the reluctance in sharing infrastructure arises Therefore, it is beyond reason to ask the existing operators who have developed their sites, invested millions of dollars, taken pains to obtain NoCs from different government departments and agencies, to share the same jointly and collectively with the new entrants.

Though infrastructure-sharing has its problems, the issue of national roaming cannot be overruled. The true concept of nationwide roaming is already being blatantly violated in context of Pakistan in the form of roaming charges on the same network. Internationally operators do not charge for roaming on the same network. Roaming charge is instead levied only on visited networks. If roaming is to be made applicable, the new entrants would be able to offer their services to clients on all regions by allowing them to roam on other operators’ networks where their own services are not available. The host operator would levy a roaming charge on the visiting subscriber and would generate additional income from its network.

Curbing roaming is against the true spirit of the GSM network and existing subscribers would be creating an undue disadvantage if it is disallowed — in fact the government must strongly impose this policy by disallowing roaming charges on operators own network and allowing inter network roaming.

A highly appreciable step was taken by the PTA last year when it reached an interconnect agreement between the local operators and opened inter-network SMS services. Both the customers and the operators benefited from this decision as an overall increased usage of SMS resulted.

The frequency bands allocated to different mobile companies must also be used more efficiently.

Umer Asif and Ghaffer Kiani are both freelance ICT journalists

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