Price war in pakistan cellular industry

Cartels are sometimes justified, but only if the benefits to the people outweigh the costs. The same scrutiny could be applied to international traffic if there was no single clearing house as long as termination is through legal providers.

Explaining the rationale behind this move, the PTA said the difference between on-net and off-net tariffs, which favours the former, creates a cult behavior whereby related subscribers club into a particular network to take advantage of the lower on-net call charges. This practice, the paper highlights, hurts the industry as some operators have been reporting losses despite having positive gross margins.

This has been the fruit of a fairly open policy where many firms have had to compete hard for customers.

telecom industry in pakistan 2017 pdf

PTA has also received a request from one mobile operator to regulate prices of data services with the objective to ensure increasing demand of consumers for enhanced mobile broadband services, while preventing potential market failure.

Why should we oblige this set of oligopolists?

Telecom industry in pakistan 2017

Should the security apparatus of the country have the ability to monitor all international calls? PTA has also received a request from one mobile operator to regulate prices of data services with the objective to ensure increasing demand of consumers for enhanced mobile broadband services, while preventing potential market failure. Service providers compete on prices and offer low tariff to attract subscribers. Also, there has been general increase in the price of goods and services owning to inflation and other factors, while mobile communication was the only sector in Pakistan which has witnessed constant decline in prices and tariffs owing to technological advancements and price wars. Explaining the rationale behind this move, the PTA said the difference between on-net and off-net tariffs, which favours the former, creates a cult behavior whereby related subscribers club into a particular network to take advantage of the lower on-net call charges. This has been the fruit of a fairly open policy where many firms have had to compete hard for customers. We have been boasting of million plus cellphone connections, a mobile network and penetration close to what is found in some of the more developed countries, an explosive and rapid increase in the number of Internet users and a good quality infrastructure in the area. Also it would ensure long term sustainability of the telecom industry in consultation and collaboration with all stakeholders including consumers, government and operators. In this regard, PTA has sought consultation from all telecom users, stakeholders, interested persons and the general public requesting them to submit their comments on the issue. There have always been rumours that PTA and other authorities have been quite lax in finding and closing down these illegal operations and prosecuting the culprits.

There has been some mention of security concerns also being served by the creation of this clearing house. Abrar Hamza November 22, KARACHI: Pakistan Telecommunication Authority PTA has decided to introduce price floor regime for mobile broadband services, in order to address the issue of unhealthy competition and protect and maintain the profitability of the telecom sector.

challenges to telecom industry in pakistan

Service providers compete on prices and offer low tariff to attract subscribers. In this regard, PTA has sought consultation from all telecom users, stakeholders, interested persons and the general public requesting them to submit their comments on the issue.

Problems faced by telecom industry in pakistan

PTA has also received a request from one mobile operator to regulate prices of data services with the objective to ensure increasing demand of consumers for enhanced mobile broadband services, while preventing potential market failure. And the cartel would also encourage further development of the illegal termination market as customers would try to avoid higher charges. So, security concerns cannot be a reason for establishing the cartel. In this regard, PTA has sought consultation from all telecom users, stakeholders, interested persons and the general public requesting them to submit their comments on the issue. These authorities contend that such a clearing house arrangement, though clearly a cartel, will stop the price war between providers, fix prices and bring more foreign currency into Pakistan. Price-fixing will hurt the consumers directly as existing rates would go up. What has been ignored has been the voice of the consumer. Service providers compete on prices and offer low tariff to attract subscribers. However, he added it would like to protect the market from any kind of collusion between big players. Explaining the rationale behind this move, the PTA said the difference between on-net and off-net tariffs, which favours the former, creates a cult behavior whereby related subscribers club into a particular network to take advantage of the lower on-net call charges. Are citizens not entitled to any privacy under the basic rights provided by the constitution? There has been some mention of security concerns also being served by the creation of this clearing house. And, if the grapevine is to be given any credence, there have always been a number of very influential and powerful Pakistanis who have been involved in the business of call termination albeit on the illegal side. PTA said there was an intense price war among operators for provision of data services even in the nascent stage of the mobile broadband data proliferation.

Regulators have mentioned that a single clearing house will help monitor all international call traffic and that this will help with security issues. Although the CCP advised that the directive should be withdrawn, the body does not have teeth and so it seems that over time the cartel is all set to come into being.

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Cartels in telecom sector