PTA Opposes Pegging Spectrum to US Dollar Amid Volatile Currency Situation

ISLAMABAD: The Pakistan Telecommunication Authority (PTA) has voiced its support against linking spectrum costs to the US dollar, highlighting the difficulties posed by the country’s unstable currency. Arif Sargana, Director General of PTA, shared these insights during the Public-Private Dialogue on the State of Competition in the Telecom Sector, an event organized by the Sustainable Development Policy Institute (SDPI).

Challenges in the Telecom Sector

During his address, Sargana emphasized that despite numerous challenges, the telecom sector in Pakistan is experiencing more competition compared to other industries. This competitive environment is not strictly enforced by the regulator but has developed organically. Sargana acknowledged that maintaining this competition while managing consumer interests amid high inflation is a difficult task for PTA.

The PTA has implemented regulations to maintain competition, including terminating the Significant Market Power (SMP) and regulating only the dominant player in Pakistan. This allows other players to set their own tariffs, fostering a competitive environment.

Stakeholders Call for Strategic Collaborations

Other speakers at the event highlighted the need for strategic collaborations among government entities, regulators, and market players. They stressed the importance of rationalizing spectrum and licensing mechanisms to remove obstacles that hinder the sector’s growth. Brigadier Muhammad Yasin (retd), a senior advisor emeritus at SDPI, described the telecom sector as the backbone of Pakistan’s economy, supporting critical areas like education, health, industry, defense, and agriculture.

Addressing Unhealthy Competition

Yasin pointed out that infrastructure sharing among telecom operators could reduce business costs and improve service delivery. He noted that in rural areas, the lack of collaboration among competitors has led to a significant reduction in the number of internet service providers, from six to three. This unhealthy competition has resulted in a decline in network quality, with 4G services not reaching their full potential, leaving Pakistan lagging behind regional standards.

Regulatory Challenges

Ahmed Qadir, Director General of Competition Policy at the Competition Commission of Pakistan, stated that while the telecom sector is not the direct focus of the Commission’s regulatory efforts, it still faces over-competition from both local and international players. This intense competition has led to a decline in the number of telecom service providers.

Qadir warned that the ability of mobile operators to function could be severely compromised without spectrum procurement, calling for a whole-of-government approach. He questioned whether the revenue generated by the sector is commensurate with the quality of services provided, citing issues like call drops and lack of mobile data availability.

Need for Market Structure Reforms

Muhammad Aslam Hayat, a senior policy fellow at LIRNEasia, highlighted the market structure, regulatory, and licensing challenges that impede the sector’s growth. He pointed out that despite being a lucrative market worth Rs 240 billion, players are leaving the sector, resulting in poor service quality for customers.

Hayat called for corrective steps from all stakeholders, including the government, PTA, and service providers. He suggested that the government should review and redesign market structures, shift to unified licensing, delink spectrum from service licensing, rationalize spectrum pricing, and reduce the tax burden on consumers. Meanwhile, the PTA should allow for retail tariff increases, encourage new entrants, develop exit regulations for inefficient operators, and reduce the regulatory burden on the industry.

Industry Representatives’ Views

Fatima, a representative from Jazz, emphasized the importance of the telecom sector as the foundation of the economy. She noted that there is no collective industry association to voice common concerns, unlike other sectors. Fatima mentioned that the current economic challenges have impacted companies’ ability to reinvest in their businesses, affecting service quality.

Parvez Iftikhar, an international ICT consultant, argued against promoting further competition in the telecom sector, stating that it is already highly competitive. He mentioned that consumers benefit from low mobile data tariffs but pointed out that the lack of infrastructure sharing among service providers has led to declining revenues and negative foreign direct investment (FDI). This, in turn, has resulted in poor broadband speed, the lowest in the region.