Affordable bandwidth is the lifeblood of IT and Telecom industry. Since last year PTCL has been resisting the tariff cuts asked by the regulator PTA through court appeal. The battle seems to be near end (see earlier post here). As reported in the local press, High Court has issued a decision against PTCL. I am sure the consumers and business folks must have sighed in relief. Not sure if this is the end of this battle or if PTCL would try to find a technical loophole to delay tariff cuts. Read a report from Daily Times below … Let’s see if all this make any impact on PTCL stock price and earning forecasts.

The Pakistan Telecommuni-cation Authority (PTA) in a landmark decision on October 6, 2006 had substantially reduced various categories of PTCL’s bandwidth tariffs. The Pakistan Telecommunication Company (PTCL), which is now a privatized company, in reaction to the PTA’s decision filed an appeal in the LHC against the said decision.

The industry had been approaching the PTA to regulate the bandwidth tariffs emphasizing that the tariffs charged by the PTCL are abnormally high and thus do not give them any competitive advantage in the international market. Moreover, some investors also contested that the tariff structure of PTCL discouraged them to make investment in Pakistan, as it is cheaper to acquire these facilities from other Asian countries. This entire scenario had been hampering the broadband proliferation and has affected the growth of IT-enabled services in Pakistan that are heavily dependent on bandwidth tariffs.

The PTCL as a recently privatized incumbent fixed line operator has a market monopoly over telecom infrastructure and of late, according to the industry, has been engaged in anti-competitive practices. According to a press statement, the PTA is closely monitoring the PTCL’s anti-competitive activities and has many a time warned the PTCL to desist from taking unnecessary steps that can potentially bring infamy to Pakistan’s telecom market. The PTA has also recently concluded a few cases of industry complaints against the PTCL’s anti-competitive behaviour on which decisions will be announced shortly.

With the dismissal of PTCL’s appeal the decision of the PTA has been upheld by the LHC and it is expected that the reduced bandwidth tariffs shall have far-reaching implications on proliferation of broadband and IT-enabled services as bandwidth cost is a critical factor that determines investment in broadband and IT-enabled services.

After considering the arguments of all stakeholders, PTA had issued its decision and had announced that in the absence of cost-related information the bandwidth tariffs of PTCL should be in accordance with the international benchmarks of countries where effective competition exists.

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