Finance division opposes rupee telecom charges


ISLAMABAD:

The Pakistan Telecommunications Authority (PTA) and the Finance Division objected to paying a fee in rupees, instead of dollars, for the renewal of telecommunications company licenses.

These companies contacted the court for the renewal of their licenses, which expired in 2019. Sources told The Express Tribune that the carriers have asked the government to charge the fees in local currency instead of the US dollar.

Last year, the government set up an all-party committee to address critical issues facing the cellular industry in an effort to promote digitization.

The committee held consultations with stakeholders and discussed proposals for biometric verification fees, rupee spectrum fee benchmarking and dispute resolution.

The Ministry of Information Technology and Telecommunications sent a draft summary of proposals to the Economic Coordination Committee (CEC) for review. The ECC will address the matter at its next meeting for a final decision.

According to sources, the PTA and the Finance Division objected to levying the license renewal fee in rupees, saying telecom companies should initially pay the fees in dollars.

The PTA priced per megahertz (MHz) of frequency spectrum in 900 MHz at $ 39.5 million and 1800 MHz at $ 29.5 million. Spectrum prices total $ 450 million for each company.

Two mobile phone operators have taken the case to court. In their plea, they said they should have a level playing field with Ufone, which renewed its license for $ 291 million in 2014.

They called for reducing the price of spectrum. The government later formed a committee to discuss license renewals for telecommunications companies.

Earlier, the heads of the Frequency Allocation Board (FAB) informed Prime Minister Imran Khan at a high-level meeting on April 1, 2019 that regulatory inconsistencies in license renewals should be corrected in order to generate revenue of $ 1. $ 3 billion.

When the prime minister asked for license renewals by auction, FAB officials said the auction could only take place if companies were notified three years in advance. The auction could have been possible if the licenses were to be renewed in 2022, they said.

In order to speed up the process, the Prime Minister ordered the establishment of a ministerial committee to oversee the work of a technical committee and formulate proposals for the renewal of authorizations.

Pakistan has fallen behind the rest of the world in the allocation of mobile spectrum.

In this region, only Nepal allocated a lower spectrum compared to Pakistan. At present, an additional 647 MHz of spectrum can be auctioned in Pakistan, which could generate significant revenue for the government.

Any increase in spectrum will result in lower costs for the telecommunications industry, lower prices for consumers, and expansion of telecommunications services to unserved and underserved areas.

Industry officials say spectrum is only of value if the telecommunications industry invests in the infrastructure and technology to deploy it.

To invest, they say, the industry must be able to generate a reasonable return commensurate with the risk.

A lack of clarity on the future availability of spectrum can dramatically increase the perceived risk for any new investment, they say.

The government had previously approved a strategy for the spectrum auction. However, industry analysts are proposing the execution of a strategy that was launched recently with specific timelines.

An effective spectrum roadmap will encourage investment in the telecommunications industry, deliver socio-economic benefits, and maximize revenue for government.

In some markets, regulators have adopted the strategy of “drip feeding” available spectrum with the aim of creating an artificial scarcity and increasing government revenues.

However, such a strategy imposes many costs on the people and economy of a country and can eventually lead to lower overall revenues for the government.

Most of the leading countries publish a spectrum roadmap that covers a forecast time horizon of three to five years.

Hong Kong publishes three-year plan while Canada and Australia unveil five-year plans.

A roadmap will bring significant benefits to the Pakistani telecommunications industry and the consumers it serves, which in turn will help the government realize its vision of Digital Pakistan.

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