KARACHI: Deregulation of the telecom sector and intense competition between the PTCL and mobile phone operators have proved beneficial to the telephone users.

There has been a massive growth in subscribers of mobile phones with the arrival of Telenor and Warid after Mobilink, Ufone, Paktel (now CMPak Limted) and Instaphone.

Currently, the total cell phone subscribers stand at over 52 million, of which Mobilink has over 23 million users followed by Ufone 11 million, Warid’s eight million and Telenor’s nine million. In 2002, cell phone users were only 1.2 million.

Manager Public Relations Mobilink Omar Manzur said that till 2004 the industry was paying activation tax of Rs2,000 per new connection. But now “we are paying Rs500 as activation tax”. There is 9.09 per cent advance income tax being charged to every customer coupled with 15 per cent sales tax levied on all services used. For every Rs100 consumed by a subscriber only Rs79 is used for telecommunication service.

He said the prices of telecom services have been reduced significantly. For instance, the rate of a local call on the Mobilink network in 2004 was Rs5.75 per minute. Today a NWD on the same network costs as low as Rs1.80 per minute.

The cut in activation tax came as an encouragement from the government that increased the upfront cost of a mobile connection to the end user. The reduction of tax enabled a larger number of low income customer to join the network.

He said the tariff reduction was based on three factors. The telecommunication base increasingly started addressing the lower income segments of the society. For this it was important that the prices of telecommunication be reduced so as to increase the access to the service.

The liberalisation of the telecommunication market led to a more efficient back-end infrastructure and lowered input cost for the customers. Increased competition led to a reduction in prices as two new operators entered the market, he added.

However, he said that a further decrease in activation tax is important as it would allow even the lower segment to enter the market. The operators have taken up the case with the government on periodic basis.

Giving a history of activation tax, he said Rs2,000 tax imposed vide SRO. 390(I)/2001 dated June 18, 2001 and on June 12, 2004, it was reduced to Rs1,000 followed by another cut to Rs 500 on June 6, 2005.

Chief of Customer Operations Ufone Naved Butt said that the company now charged a unified call rate of 99 paisa per 30 seconds as compared to Rs five per minute (company to company) and Rs6.60 per minute on other operators’ network in 2002.

He said that the operators want elimination of activation charges in order to lure more customers.

In telephone, there has been nine per cent decline in call rate to Rs2.3 per minute in 2007 as compared to Rs2.5 per minute in 2002. Currently, the government nets 0.47 paisa per minute in terms of taxes. -—ASK