PTA has introduced a mechanism for all cellular Mobile Operators to price regulate.
PTA has mentioned in its consultation papers that telcom operators have been requesting a course of action for price flooring of telecom services in Pakistan.
While PTA had assigned its rights to each telecom company for campaigning freely in market and can draw people’s attentions through aggressive promotional campaigns and now it has changed to reduce race to the bottom and lower revenue for some operators.
PTA has taken this initiative of price floors due to Declining revenues and hyper aggressive promotional campaigns for each nework and mobile operator.
The Pakistan Telecommunication authority has set a deadline of one month for industry stakeholders to offer comments on the consultation papers floated recently in the telecom industry.
PTA has also asked CMOs to give their input on the floor prices for various telecom services. CMOs will also provide details of per minute cost of voice calls and SMS for both on-net and off-net and for both post-paid and pre-paid connections.
PTA has asked stakeholders:
“Should PTA direct operators to stop offering unlimited on-net calls or curtail the time of offering unlimited promotions?”
Uptil now, market and competition have determined pricing for various services but PTA has made it clear that it reserves the right to review the appropriateness and adequacy of service charges of telecom operators on regular basis as per clause of 9.4.1 of new Telecom Policy 2015.
Are CMOs Overcharging Customers through High Off-net Charges?
PTA highlighted an issue raised earlier in National Assembly that alleged that mobile phone companies are overcharging customers through high off-net tariffs
According to PTA investigation, the price difference between on-net call charges and off-net call charges is significant.
According to PTA, mobile phone companies introduced unlimited on-net calls for as low as Rs. 5 per day as compared to up to Rs. 1 charges for off-net calls. PTA said that this pricing mechanism is followed by every operator
As a result, all market players followed each other in introducing daily packages which carry a heavy cost for all companies and hurt the whole sector ultimately.
According to PTA:
- Zong is offering 160 promotions including 148 location based packages
- Mobilink is offering 18 promotional offers including 36 location based packages
- Ufone is offering 29 promotional offers including 41 location based packages
- Warid is offering 13 promotional scheme including 4 location based packages
- Telenor offers calling packages from Rs5 to Rs 16.73 for unlimited on-net calls
According to a report from the Telecommunication Management Group, a US based consulting firms, telecom operators create a significant increase between on-net minutes and off-net minutes either by lowering charges of on-net calls or increasing charges of off-et calls.
PTA has asked stakeholders:
“What are your views on the offer of general/ country-wide promotions instead of city-specific promotion offered by CMOs?”
This difference in call prices creates a cluster of subscribers in the form of calling circles within the network of networks. As a result, operators with big subscribers base grow faster compared to lower subscribers base.
PTA mentioned in the paper that telecom authorities of different countries intervened in the market not only to reduce imbalance between on-net and off-net call charges but to safeguard the interest of industry as well.
It presented models of different countries including Turkey, Singapore, Colombia, Kenya and Slovenia.