KARACHI, Feb 12: In regard to the Voice over Internet Protocol (VoIP), Pakistan Telecommunication Company Limited (PTCL) appears to have had a change of heart. First the telecom appeared to prepare itself to wrest its slice of the cake, but an invitation for proposal floated on Friday, shows that instead of joining them, it now wants to beat the (illegal) service providers.

Telecom analysts explain that VoIP is basically IP-based telephony. As against the existing ‘circuit switched’ telephony, the IP-based telephony enables a higher number of calls to be squeezed through the available bandwidth. For example, one telephone connection instead of carrying one phone call at a time, can, under IP carry several calls. This enables the service provider to charge lower tariff, thus benefiting the consumer.

“Illegal service providers in the US and Europe are already offering VoIP services by effectively bypassing the PTCL’s network via installation of gateways without the knowledge of PTCL,” telecom analysts say.

Realising the loss, PTCL was understood to have decided to wrest the share of this IP-based revenue segment. And back in July 2000, telecom had invited Expressions of Interest (EoI) from parties interested in operating and maintaining a VoIP service for incoming calls from the US and Europe.

Having heard nothing from PTCL about VoIP for over a year, most people believed that PTCL was still in the process of evaluating those bids. But on Friday, an announcement from PTCL said: “Pursuant to its exclusivity (until end-December 2002) and as a part of its on-going efforts to combat the illegal international incoming voice traffic in Pakistan, PTCL invites proposals from credible parties for termination of additional international voice traffic originating from the US and Europe towards Pakistan”. Interested parties have been asked to submit their proposals by March 8, 2002.

The decision by PTCL to catch the illegal VoIP service providers, instead of competing with them, could have been spurred by the fear that it would further curtail the telecom’s incoming call revenue. Callers from Europe and the US — that constitute 58 per cent of the total incoming 785 minutes — would have secured cheaper rates from VoIP (close to US 8 to 10 cents per minute).

PTCL’s international revenue amounted to Rs19 billion in financial year 2001. Although volumes were on the rise given the continuous line expansion and increased digitalization, reduced international settlement rates or Total Accounting Rates (TAR) — as they are technically termed — are primary factors for the decline of total incoming call revenue as percentage of total revenue. The average TAR which stood close to US $1 per minute in financial year 1997, had dropped to 38 cents per minute in 2001. “Its contribution to PTCL’s revenue is gradually declining as it constituted 44 per cent of total revenue in 1997 and only 30 per cent in 2001 revenues,” analysts say.

If PTCL had pushed ahead with its earlier plans to provide VoIP services, it would surely have undermined its already declining international incoming revenue stream in this region. But it was a way to compete with the illegal operators and possibly win the biggest slice of the cake. Instead, PTCL has now decided to catch the culprits. But in its attempt to stem the illegal VoIP service, technology and time are against the telecom.

Unauthorized service providers are likely to find new ways to go around what ever barriers are erected and with only ten months to the end of its exclusivity on December 31, 2002, PTCL hardly has the time to justify the costs that may be involved.