Telecommunications Regulation. PAKISTAN Rizvi, Isa, Afridi & Angell

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1 Telecommunications Regulation PAKISTAN Rizvi, Isa, Afridi & Angell CONTACT INFORMATION Ahsan Zahir Rizvi Rizvi, Isa, Afridi & Angell D-67 Block 4, Clifton Karachi Pakistan What is the name and nature of the regulatory body(ies) in your jurisdiction? To which bodies (if any) are decisions appealed? The Pakistan Telecommunication Authority (the PTA ) regulates the telecommunication sector in Pakistan. It was established under the Pakistan Telecommunication (Re-Organization) Act, 1996 (the Act ). It regulates the establishment, operation and maintenance of telecommunication systems and the provision of telecommunication services in Pakistan. Individuals or bodies aggrieved by any decision or order made by the PTA, may, within thirty days of the receipt of such decision or order, appeal to the High Court. 2. Has your jurisdiction adopted the WTO Basic Telecommunications Agreement? If yes, with what exceptions, if any? Pakistan has adopted the WTO Basic Telecommunications Agreement. It is in compliance with all its obligations which include the provision of basic voice telephone services, cellular mobile services, data services and private leased line devices amongst others.

2 3. Are operators in your jurisdiction privately or publicly/state owned? There are multiple operators in Pakistan. Some are state owned whereas others are owned privately. 4. What are the primary differences between the regulation of wire line, wireless, satellite, cable and VoIP providers? The Act, together with the Pakistan Telecommunication Rules, 2000 (the Rules ) regulates wireline, wireless, satellite and cable providers. The PTA grants and renews licenses for all telecommunication systems and services. The General License Conditions delineated in Appendix B of the Rules regulate the terms and conditions of the license granted to wireline and wireless services providers. The rights and obligations of satellite and cable providers are governed by the Telecommunication Infrastructure Provider License. The former are granted for a minimum period of twenty five years whereas the latter have a term of twenty years. The afore-stated licenses are renewable subject to the Act and the Rules. 5. Are broadcasters regulated separately from telecoms? Broadcasters are regulated separately from telecoms in Pakistan. The former are regulated under the Pakistan Electronic Media Regulation Authority Ordinance, 2002, whereas the latter are regulated under the Act. 6. How are satellite earth stations and submarine cable landings regulated? The PTA issues non exclusive licenses to telecommunication infrastructure providers. Both satellite earth stations and submarine cable landings come within the scope of telecom infrastructure facilities. All such licenses are valid for a term of twenty years. A licensee wishing to renew the same should submit a written request to the PTA to renew the license 30 months prior to the initial expiry. The PTA may accept or reject the request. In case of the former a detailed procedure for reconciliation has been delineated. 7. How is the radio spectrum generally regulated? The Frequency Allocation Board (the Board ) established under Section 42 of the Act has exclusive authority to allocate and assign portions of the radio frequency spectrum to the Government, providers of telecommunication services and systems, radio and television broadcasting operations, public and private wireless operators and others.

3 Every application for allocation and assignment of radio frequency spectrum has to be made to the PTA. The PTA is required to refer the application to the Board within thirty days from receipt of such application. On receipt of the application, the Board classifies the telecommunication services and allocates or assigns the specific frequencies to the applicant. The Board is required to intimate the applicant of the status of the application within three months. 8. Are any operators granted exclusivity? Operators are not granted exclusivity. Pursuant to the Deregulation Policy, 2003 the Government of Pakistan has liberalized the telecommunication sector thereby achieving a more competitive environment. The Act was amended in 2006 to clarify that the licenses granted by PTA will not confer exclusivity. 9. Are anti-competitive practices subject to regulation or general competition (e.g., antitrust) laws? The PTA is responsible to ensure the existence and maintenance of fair competition in the telecommunication sector. Anti-competitive practices are subject to general competition law. The Competition Ordinance, 2007 prohibits the abuse of a dominant position by an undertaking, simultaneously proscribing agreements between and amongst undertakings which inter alia alter market conditions artificially. Undertakings are not allowed to enter into deceptive market practices which are detrimental to the interests of other undertakings. Mergers and acquisitions have to be approved by the Competition Commission of Pakistan in accordance with the Competition Ordinance 2007 and the rules and regulation framed there under from time to time. 10. What services have been liberalized or designated as competitive services? The telecommunication sector in Pakistan underwent deregulation pursuant to the De- Regulation Policy 2003 for the Telecommunication Sector. All the services in the sector are provided to increase the options available to the customers at competitive and affordable rates by encouraging fair competition amongst service providers. 11. Are there regulated tariffs or price lists? If so, for what types of services? The tariff payable to wireline service providers is regulated. The Fixed Line Tariff Regulations, 2004 regulate the rates charged for the provision of telecommunication services by Local Loop ( LL ) and Long Distance and International Telephony ( LDI ) operators. Operators who do not have Significant Market Power ( SMP ) are free to set and revise their tariffs at any time and in any manner they like. They are required to

4 inform the PTA about the proposed tariffs thirty days before the applicability of new tariffs. LL and LDI operators which are determined to have SMP status in a LL fixed line telecommunication market by the PTA are required to ensure that the weighted average price increase charged in each consecutive twelve-month period should be fixed so as to satisfy the criteria formulated in the LL Price Control Formula and the LDI Price Control Formula respectively. The tariff for leased lines services is to be based on costs. 12. Are there restrictions on foreign investment in any types of communications companies? If so, what are the restrictions? There are no restrictions on foreign investments in companies providing IT and telecom services except for minimum investment requirements under the prevalent investment policy of Pakistan. 13. What are the approval processes for mergers and acquisitions? Do these vary by type of operator? Mergers and acquisitions are regulated by the Competition Ordinance, 2007 and the Competition (Merger Control) Regulations, They apply to all operators in Pakistan without distinction. Undertakings are prohibited from entering into mergers or acquisitions which substantially lessen competition by creating or strengthening a dominant position in the relevant market. Where undertaking(s) intend to merge or acquire another undertaking or business and meet the pre merger notification thresholds, they are required to apply for clearance from the Competition Commission of Pakistan ( CCP ). A pre-merger application has to be submitted in the prescribed manner with the requisite processing fee as soon as an agreement to merge is reached in principle or a non-binding letter of intent is signed. The CCP may accord clearance to a merger or an acquisition within 30 working days of receipt of the application. However, if the CCP concludes in phase 1 of its review of the application that the intended merger meets the relevant thresholds and presumption of dominance, another phase of review maybe initiated by it which may last up to 90 days. The CCP is required to give its decision within these 90 days. Consummation of the intended merger may be prohibited, approved subject to conditions or approved unconditionally.

5 14. Is interconnection between carriers mandatory? Carriers are required to respond to the request to provide interconnection to other operators desiring to interconnect. The PTA Rules (the Rules ) and the Interconnection Guidelines, 2004 (the Guidelines ) regulate interconnection between carriers. Where an operator submits its request for interconnection to another, the former is required to respond in writing. It may accept the request completely or partially. It can only deny the request in its entirety based on reasons which have been s 15. Are interconnection fees/rates regulated? Subject to the Rules and the Guidelines, a carrier is entitled to fix different tariffs and terms and conditions in respect of interconnection services for different categories of operators and interconnection services where the differences can be objectively justified on the basis of the costs incurred in providing such services. Such tariff has to be approved by the PTA from time to time. 16. Must carriers make available network components to competitors? If so, what are fees/prices based on cost, or market rates? Carriers are not required to make network components available to their competitors until they enjoy SMP. Carriers which are requested to interconnect with other operators are required to provide access to those components of their network which are needed to ensure interconnection. The requesting operator is only required to pay for the network components or interconnection facilities it requires. A carrier which has been given an infrastructure license and has been determined to possess SMP in the relevant market by the PTA is required to provide access to its ducts, poles, towers, or other similar facilities for use by licensed telecom Infrastructure Facility Providers. 17. Is there an obligation to serve all customers? If yes, is there a fund to subsidize eligible carriers? Which carriers contribute to the fund? Which carriers are eligible to receive these funds? Are broadband services subsidized or otherwise promoted through tax or other incentives? The telecommunication sector has been liberalized to maximize the commercial availability and coverage of telecommunication networks and services in Pakistan. Licensees are required to serve all customers. They cannot discriminate or give preference to particular person(s). No fund has been established to subsidize eligible carriers.

6 The Government of Pakistan aims to increase broadband penetration in the country. The Broadband Policy, 2004 delineates a number of cost cutting measures which include inter alia, reduction in international IP and domestic bandwidth prices. Provision is also made for the reduction of the primary rate interface ( PRI ) charges to a level where the gap created in the dial up infrastructure usage by the dial up users switching over to broadband services would not make the operational and capital expenditure in the PRI service a liability for the internet service providers. 18. Are there mandatory requirements to customer agreements (subscriptions, etc.)? The Rules and the Mobile Cellular Policy, 2004 require service providers to prepare a standard contract of service which would govern the contractual relationship between the provider and its customer. A copy of the terms has to be submitted to the PTA. No mandatory requirements have been stipulated. 19. Are there any general or telecommunication specific requirements as to data retention? The Access Promotion Contribution Rules, 2004 ( APCR ) and the Mobile Number Portability Regulations, 2005 ( MNPR ) stipulate telecommunication specific data retention requirements. The Pakistan Electronic Crime Ordinance, 2007 ( PECO ) and the Electronic Transaction Ordinance, 2002 ( ETO ) regulate data retention generally. APCR requires Local Loop (LL) and long distance and international (LDI) licensees to report the total number of minutes and payments made due to incoming international telephony services that are delivered and carried to and by the licensees to the Authority on a monthly basis. Mobile licensees are required to report the total number of incoming telephony service that is delivered to their telecommunication system by each LDI Licensee on a monthly basis. The licensees are required to keep the records for a period of at least three years. MNPR requires operators licensed to provide mobile communication services to maintain usage records. 20. Is number portability mandatory? If so, for which types of carriers (e.g., wireline, wireless, voice over internet protocol)? Number portability is mandatory. Cellular Mobile Telecommunication Licensees are required to provide number portability services to their customers as per the MNPR. 21. Is equal access dialing selection mandatory? If yes, for which types of carriers? Equal access dialing selection is mandatory for wire line and wireless service providers.

7 22. Is access or other contributions ( ADCs ) required of new entrants? All licensees are required to contribute to the Universal Service Fund ( USF ) and the Research and Development Fund ( RDF ). They are required to contribute 1.5% and 1% of their annual gross revenue to the respective funds. LDI licensees are also required to pay Access Promotion Contribution for fixed line LL. 23. Is VoIP regulated? If yes, to what extent? VoIP is not specifically regulated. The PTA has undertaken a technology neutral licensing regime. LL, LDI and cellular mobile operators may employ VoIP technology within the flexibility of the license granted. 24. Are any major changes to telecommunications laws expected in the near future? The PTA is in the process of issuing the Monitoring and Reconciliation of Telephony Traffic Regulations, Its object is to monitor the information passing through the processing equipment and accessories associated with the licensee(s) and Access Providers networks for the verification of authorized use as well as reconciliation of total traffic terminated on the network of the licensees to measure and record for billing verification. It also aims to detect and control grey traffic, and determine the quality of licensed services. 25. Is resale of telecom services permitted? If yes, is this activity regulated? What is the process to become a reseller? Are foreign companies permitted to be resellers? Telecom services cannot be resold without the prior written consent of the PTA. No distinction is made between domestic or foreign companies in this regard.

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