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Top cellular operator directed to revise tariff by July 17

By Naveed Ahmad

ISLAMABAD: The Pakistan Telecommunication Authority (PTA) has found Mobilink guilty of openly involved in anti-competitive practices by overcharging its ‘valued subscribers’ for making calls to other cellular operators from its network.
Since July 1, Mobilink was charging its subscribers Rs 2 per minute for off-net calls (Mobilink to other networks) instead of Rs 1.25 per minute in terms of call termination charges. Even prior July 1 reduction in charges, Mobilink was illegally minting 40 paisa per minute by charging additional Rs 2 per minute for off-net calls instead of Rs 1.60 per minute.

Though the inflated Mobilink charges were imposed on all packages but Jazz subscribers were the primary victims. The authority directed the significant market player (SMP)in cellular service industry – Mobilink – not to charge “additional tariffs for off-net calls in excess of the ‘termination charges’ of the called network in its pre-paid Jazz package.
On August 25, 2004, Mobilink was declared as Significant Market Power (SMP) operator in mobile telecommunication market by the PTA with the objective of protecting the interests of other mobile operators and to encourage effective competition. Then the authority also directed the mobile SMP operator i.e. Mobilink to get prior approval of its proposed tariffs in order to ensure that its tariffs are not anti-competitive.

The landmark PTA decision states, “Mobilink shall make necessary revisions in its tariffs in compliance with this determination, within ten (10) calendar days of this determination and confirm compliance.”

The PTA has directed Mobilink to revise its all package downward for off-net calls in line with its decision by July 17. Though, the PTA issued the determination on July 7 but it uploaded the same on July 12 without issuing a formally announcing it for general public.

On the analysis, deliberations with the operators, hearings held on March 13, March 16, March 24 and March 28, provisions of the act and mobile policy, the PTA verdict said, “Mobilink shall not unduly discriminate the on-net and off-net calls and shall not charge additional tariffs for off-net calls in excess of the ‘termination charges’ of the called network.”

The decision also stated that the SMP operator would apply the same charging mechanism (in terms of time duration) for on-net (Mobilink to Mobilink) and off-net calls (Mobilink to other networks).

The PTA also clearly stated in its order that its decision would be applicable on all packages (existing as well as forthcoming) of leading telecom player, Mobilink. The PTA is a corporate body with the mandate to regulate the establishment, operation and maintenance of telecommunication systems and the provision of telecommunication services in Pakistan and also to regulate competition in the telecommunication sector and protect consumer rights.

Mobilink, on the contrary, did not comply with the directive of the authority. In February 2002, Mobilink levied extra Re.1/minute for off-net local calls to other fixed and mobile networks, in the name of ‘Other Network Access Charge’. The authority had then observed that ‘Other Network Access Charge’ was levied by Mobilink without any justification. The authority also observed that levying of ‘Other Network Access Charge’ in addition to ‘airtime’ and ‘termination charges’ would tantamount to increase the effective retail tariffs.

Mobilink announced the new tariff with prior approval of the authority, prompting the competitors to stop the SMP from charging discriminatory tariffs. The other cellular service providers pleaded that the unilateral decision would result in discouraging Mobilink’s customers to make off-net calls to other networks and would affect their revenues from incoming calls.

After several deliberations with the authority, Mobilink agreed in principle but the decision could not be implemented owing to various development in the industry.

On October 30, 2005, Mobilink once again reduced its prepaid tariffs without seeking prior approval of the authority. For on-net calls, Mobilink reduced their ‘airtime’ tariffs from Rs.3.50 per minute to Rs.2.70 per minute, whereas for off-net calls to other fixed as well as mobile operators, it offered Rs 4.70 per minute. It is pertinent to mention that for postpaid customers, Mobilink charged tariffs equivalent to ‘airtime’ plus ‘termination charges’.

For off-net calls to cellular networks, Mobilink charged a differential of Rs 2 per minute, whereas the authority has determined mobile termination rate at Rs.1.60 per minute. As a result, Mobilink was charging an excess of Rs 0.40 per minute as against the limit placed by the authority.

Similarly, for off-net calls to fixed-line, Mobilink charged an excess of Rs.1.48 per minute as against the limit placed by the authority. Mobilink did not implement the authority’s direction on the issue but argued that the other cellular mobile operators were also charging off-net tariffs in excess of ‘termination charges’ and so the SMP is justified in charging excessive tariffs.

Mobilink was of the view that since the mobile sector is growing and sufficient competition is prevailing, therefore, the Authority should not intervene in regulating the tariffs. Mobilink also claimed that there are certain cost implications involved. Mobilink also stressed that, due to increased number of mobile operators, the subscribers have the option to select the carrier of their choice and this is why the authority should not intervene and regulate cellular tariffs at micro-level.

Mobilink did not provide its cost to the authority in support of its reasons. The PTA believes that the reasons of Mobilink for charging higher off-net tariffs did not carry sufficient substance to justify levying of these charges.

The PTA also found that Mobilink’s justification that higher off-net tariffs help them in investing and expanding their network is a baseless argument and it is at the cost of hurting other operators, which results in extracting money through restricting competition and exploiting the consumers. The authority also found out that Mobilink has different tariff structure for its postpaid and prepaid subscribers. For postpaid customers, Mobilink is charging ‘airtime’ plus ‘termination charge’ for off-net calls, whereas for prepaid customers, Mobilink has introduced tariff which is more than the ‘airtime’ plus ‘termination charge’.

Courtesy: The News