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PTA cuts bandwidth rates

June 24, 2006

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ISLAMABAD, June 23: The Pakistan Telecommunication Authority (PTA) has announced the much-awaited reduction in tariffs of international bandwidth and directed Pakistan Telecommunication Company Ltd (PTCL) to implement the reduced rates in order to accelerate the spread of broadband services in the country.

The decision in this regard came during a hearing on international bandwidth tariffs held at the PTA headquarters here on Friday. The final hearing was conducted by PTA Chairman Maj-Gen (retd) Shahzada Alam Malik, member finance Syed Nasrul Karim A. Ghaznvi and member technical Dr Mohammad Yasin. Representatives of PTCL, the Internet Service Providers Association of Pakistan (ISPAK), Telecard and other telecom operators also attended the hearing.

After considering the recommendations of the operators, the telecom authority announced that bandwidth tariffs of PTCL should be in accordance with the international trends to attract foreign consumers and to facilitate local subscribers.

The site clearance fee for fixed wireless access (FWA) of Rs29,000 being charged by the PTA was waived with immediate effect. The authority also announced that DSL line rent of Rs250 being charged by PTCL to other DSL operators was abolished immediately. PTCL has also been asked to review its standard operating procedures (SOPs) for co-location to resolve the complaints of broadband service providers.

Speaking on the occasion, the PTA chairman said the tariffs charged by PTCL were abnormally high and did not give any competitive advantage to the industry in the international market. The industry had been approaching the PTA for quite some time on the issue and was demanding a fair deal which was now there in the shape of detailed PTA determination aimed at rationalising prices.

He said investors had pointed out that the current tariff structure was discouraging investment in Pakistan, as it was cheaper to acquire these facilities from other Asian countries. "This entire scenario was hampering the broadband proliferation in Pakistan," Mr Malik observed.

As for the international private leased circuit (IPLC) tariffs effective from July 1, 2006, E1 (2M bps) for internet service providers (ISPs) will be $3,000 instead of $3,950 whereas for call centres it would be $2,400 instead of $3,500.

Similarly, for DS3 (45M bps) ISPs will pay $39,000 instead of $67,150 and call centres will be charged $31,200 instead of $57,150. Synchronous transfer mode (STM1) (155M bps) price will be $84,000 and $67,200 for ISPs and call centres, respectively.

From January 1, 2007, tariffs for voiced data services have been merged and will go down further to $2,400, $28,800 and $67,200 for E1, DS3 and STM1, respectively.

Similarly, data and voice services rates of internet protocol (IP) have also been reduced significantly. For data services, IP rates for ISPs and call centres will be reduced in two phases. From July 1, 2006, E1 rates will be $1,400 instead of $2,000; DS3 will be $22,400 instead of 31,348; and STM1 will be $43,400 instead of $76,000.

The tariff will be revised from January 1, 2007, and E1 will come to $1,200, DS3 to $16,800 and STM1 to $37,200. Moreover, IP tariffs for voice services for long distance and international (LDI) operators have also been revised and reduced by 47 per cent to 49 per cent, which would be effective from July 1, 2006.

The PTA also reduced domestic private leased circuits (DPLC) tariffs for data network operators (DNOP) by 35 per cent. Similarly, DPLC tariffs for voice services have been reduced by 20 per cent to 30 per cent.

The PTA chairman said the authority had decided to regulate IPLC and IP tariffs and had asked PTCL to review and rationalise its international bandwidth prices, remove distortions and submit a comprehensive proposal for all categories of international bandwidth rates.

At present only PTCL is offering international bandwidth in Pakistan through SMW-3 (Southeast Asia, Middle East and Western Europe) SMW-4 and fibre optic link around the globe (FLAG), restricting effective competition. The company is likely to maintain its dominance in the market for the next few years.

The IPLC that offers global connectivity through submarine cables is a critical input for provision of broadband and internet services, international long distance voice telephony and for a number of key industries like call centres and other information technology services. The cost of IPLC forms a substantial portion of the total cost of user industries.

The competitiveness of these industries in the global market to a large extent is dependent on the prices they pay for international bandwidth.

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