ISLAMABAD (July 29 2010): The government is reportedly making it mandatory for the cellular companies to procure systems to curb grey traffic and channelisation of monetary transaction with foreign operations through the State Bank of Pakistan, official sources told Business Recorder. Incoming international telephony traffic generates a financial premium over the cost of conveying and terminating such traffic into Pakistan.

According to the provisions of Telecom Deregulation Policy, approved by the Cabinet in 2003, Long Distance International (LDI) licensees would be permitted to retain a fixed share of termination charge paid by international carriers while the remaining portion of premium is to be used for infrastructure development to increase the tele-density. The latter is termed as the Access Promotion Contribution (APC).

In the existing policy regime this premium for the calls terminating on local loop operators (LLOs) is passed on to LLOs while the APC on cellular termination is collected and provided to Universal Services Fund (USF), the agency responsible for expanding the infra-structure of tele-density in the country. Moreover, the policy entrusted Pakistan Telecommunication Authority (PTA) to devise a formula for revenue sharing, which would be reviewed and notified, at least, once every six months. Framework for APC was outlined in Access Promotion (AP) Rules and AP Regulation published by the PTA in 2005.

Pursuant to Deregulation Policy and AP Rules and Regulation, PPTA monitors and approves the international telephone service agreements recommended by a consortium of LDI operators. From time to time, PTA has been reviewing the APC by issuance of determined rates. However, telecom industry has been agitating, for quite some time, on Approved Settlement Regime (ASR) introduced by PTA and they have expressed reservations on recent determinations issued by the PTA.

Sources said current regulatory regime does not provide the mechanism to effectively curb the menace of grey traffic, resulting in a huge financial loss to the exchequer. The matter was referred to the IT Ministry for resolution. A committee comprising representatives of the industry, PTA and MoIT was constituted to deliberate upon the issue. The committee held a series of consultative meetings, with all the stakeholders to finalise the revised policy for ASR.

Based on the consensus, worked out through the consultative process, MoIT proposes the following changes in the clause 4.3 of the Telecommunication Deregulation Policy and to make them the integral part of the next telecom policy for the sector as per following: (i) at present, net incoming international traffic generates a financial premium over the cost of conveying and terminating the traffic into Pakistan; and (ii) for next five years a reasonable portion of the premium is proposed to be used to promote infrastructure expansion.

The design and implementation of APC programme will be guided by the following principles: (a) APC shall be used to foster new infrastructure development to increase tele-density through local loop operators, mobile cellular operators and USF; (b) distribution of funds between all stakeholders shall be done in a transparent and non-discriminatory manner;(c) APC programme shall be under the regulatory supervision of PTA, which shall also regulate international traffic agreements;(d) in order to stabilise ASR and to eliminate the speculation in the market ASR distribution mechanism for various stakeholders should for the next five years;(e) a fair share in APC called APC-M may be allocated to mobile cellular operators; (f) mobile cellular operators shall procure the system to curb grey traffic on access level which will also facilitate quality of service monitoring and implementation of International Mobile Equipment Identity (IMEI) regime.

It is also being proposed that LLOs shall provide 200,000 broadband connections each year exclusively with APC amounts for next five years. Based on the percentage share in APC, the authority shall determine the obligatory connections of each operator. In order to secure the effective collection of APC, negotiations of bilateral accounting rates will be supervised by PTA. The principle of "one country one rate" will be implemented.

PTA would establish an international traffic clearing house for all incoming international traffic. Through this clearing house PTA would have statistics of all incoming and outgoing traffic including the satellite traffic. All licensees will be obliged to file reports on the volumes, sources and destinations of international incoming minutes, and PTA shall audit their itemised call records and billing systems with the objective of detecting and eliminating fraud.

Channelisation of forex inflow of incoming traffic as well as monetary transactions with foreign operators would be through the State Bank of Pakistan; and six monthly account audit and stabilisation of call rates will be ensured by the PTA, the sources continued.

A fund for the revitalisation of local ICT/telecom equipment manufacturing through public private partnership and curbing the grey traffic under MoIT may be created with the differential amount from APC-M and APC-USF over the international mobile terminating traffic. Accounting separation will be strictly enforced for access promotion contribution received by the operators for tele-density enhancement and the same shall be audited by the PTA, biannually.

PTA would devise all possible mechanisms to protect the share of LDI operators including maintaining the "white list" and "black List" of international carriers whereby LDI operators would be allowed to terminate traffic only for those international carriers on the "white list". International carriers observing the sanctity of the ASR of the country will be included in the white list. Whereas LDI would register written complaint with the Regulator (PTA) for non-compliance of the sanctity of the ASR and PTA shall black list those carriers and direct LDIs to stop bringing traffic from black listed carriers. Sources said LDI operators would be required to submit bank guarantees to all the recipient organisations so that the same can be encashed in case of default from LDI. PTA would issue comprehensive regulations to ensure sanctity of ASR and timely payment of outstanding amounts by all concerned.

Copyright Business Recorder, 2010