The Competition Commission of Pakistan (CCP) upon application filed by PTCL and other LDIs operators has allowed withdrawal of the application filed under Section 5 of the Competition Act, 2010 (Act) for the purpose of seeking exemption for their proposed International Clearing House Agreement (ICH Agreement) to be entered into between PTCL and the LDI Operators disposing the matter through its Order dated 9th February 2012. Through the proposed ICH Agreement, the LDIs intended to assign their rights, granted to them by the PTA under the LDI license, to terminate incoming international traffic to PTCL. During the period the ICH Agreement were to be in effect, each LDI were to “suspend and keep suspended all interconnection capacities in relation to Pakistan Incoming Traffic at its end. PTCL were to act as the sole LDI operator with the right to exclusively terminate all incoming traffic to Pakistan. PTCL were to sell its call terminating services to foreign carriers at the Approved Settlement Rates of the PTA, and each LDI would get a pre-determined fixed quota from PTCL to terminate calls at its network, and receive a fixed share of revenues generated from all incoming international traffic. The arguments presented by the applicants to support the ICH Agreement included stabilization of the Pakistan international incoming traffic rate as per PTA directive/determination, curb the grey traffic, create a vital impact on the national economy in terms of huge influx of foreign exchange in the country, increased taxes for the Government of Pakistan due to increase in revenue. The applicants claimed that the ICH would not fix price, but only PTA’s Approved Settlement Rates would be implemented and it would have no control on the production of voice minutes towards Pakistan thus having no impact on telephone users in Pakistan. Trans world Associates Private Limited (TWA), a company that operates and owns its own undersea fiber optic cable system, being the only competitor of PTCL strongly objected to the formation of ICH and became a necessary party to the proceedings. TWA refuted the arguments presented by the Applicants and stated that ICH will not curb grey traffic since there are other technology options for those who wish to engage in illegal activities. In fact higher APC will encourage more grey traffic, thus negatively impacting foreign exchange influx and losses to exchequer. It was submitted that the LDI’s reliance on PTCL for its voice business will allow PTCL to influence its decision on which carrier to use for its Data business also and a strategic asset of the country, TWA will be forced to relinquish its commanding market share in this market segment without adequate justification or compensation. They further stated that Increasing incoming termination rates will provoke foreign operators to increase outgoing termination rates vice versa, affecting local consumer who in-turn will have to pay more and reliance on single operator will result in overall weakening of Pakistan’s international communications infrastructure and also impact the domestic telecom sector due to brain drain and job losses. PTCL while filing its point wise rebuttal to the TWA’s presentation through an even number letter dated 7th February 2012 requested the Commission to allow withdrawal of their application for exemption on the grounds that “the industry has not reached consensus on the modalities of ICH operations.” ADG (Pvt) Ltd. and Link-Direct in their letters also requested withdrawal of the subject exemption application stating that they “have decided to shelf [the ICH Agreement] for the time being. Since, the idea will not be implemented; therefore, we do not consider this as a live case”. While allowing the withdrawal of the exemption application, in this regard the Order passed by the Commission stated that if in future the Applicants enter into such agreement/arrangement, notwithstanding, any authorization obtained from any other authority such agreement/arrangement prior to its execution would require clearance from the Commission, as, prima facie, it has serious competition concerns and would attract the provisions of the Competition Act, 2010.
The Competition Commission of Pakistan (CCP) upon application filed by PTCL and other LDIs operators has allowed withdrawal of the application filed under Section 5 of the Competition Act, 2010 (Act) for the purpose of seeking exemption for their proposed International Clearing House Agreement (ICH Agreement) to be entered into between PTCL and the LDI Operators disposing the matter through its Order dated 9th February 2012.
Through the proposed ICH Agreement, the LDIs intended to assign their rights, granted to them by the PTA under the LDI license, to terminate incoming international traffic to PTCL. During the period the ICH Agreement were to be in effect, each LDI were to “suspend and keep suspended all interconnection capacities in relation to Pakistan Incoming Traffic at its end. PTCL were to act as the sole LDI operator with the right to exclusively terminate all incoming traffic to Pakistan. PTCL were to sell its call terminating services to foreign carriers at the Approved Settlement Rates of the PTA, and each LDI would get a pre-determined fixed quota from PTCL to terminate calls at its network, and receive a fixed share of revenues generated from all incoming international traffic.
The arguments presented by the applicants to support the ICH Agreement included stabilization of the Pakistan international incoming traffic rate as per PTA directive/determination, curb the grey traffic, create a vital impact on the national economy in terms of huge influx of foreign exchange in the country, increased taxes for the Government of Pakistan due to increase in revenue. The applicants claimed that the ICH would not fix price, but only PTA’s Approved Settlement Rates would be implemented and it would have no control on the production of voice minutes towards Pakistan thus having no impact on telephone users in Pakistan.
Trans world Associates Private Limited (TWA), a company that operates and owns its own undersea fiber optic cable system, being the only competitor of PTCL strongly objected to the formation of ICH and became a necessary party to the proceedings. TWA refuted the arguments presented by the Applicants and stated that ICH will not curb grey traffic since there are other technology options for those who wish to engage in illegal activities. In fact higher APC will encourage more grey traffic, thus negatively impacting foreign exchange influx and losses to exchequer. It was submitted that the LDI’s reliance on PTCL for its voice business will allow PTCL to influence its decision on which carrier to use for its Data business also and a strategic asset of the country, TWA will be forced to relinquish its commanding market share in this market segment without adequate justification or compensation. They further stated that Increasing incoming termination rates will provoke foreign operators to increase outgoing termination rates vice versa, affecting local consumer who in-turn will have to pay more and reliance on single operator will result in overall weakening of Pakistan’s international communications infrastructure and also impact the domestic telecom sector due to brain drain and job losses.
PTCL while filing its point wise rebuttal to the TWA’s presentation through an even number letter dated 7th February 2012 requested the Commission to allow withdrawal of their application for exemption on the grounds that “the industry has not reached consensus on the modalities of ICH operations.” ADG (Pvt) Ltd. and Link-Direct in their letters also requested withdrawal of the subject exemption application stating that they “have decided to shelf [the ICH Agreement] for the time being. Since, the idea will not be implemented; therefore, we do not consider this as a live case”. While allowing the withdrawal of the exemption application, in this regard the Order passed by the Commission stated that if in future the Applicants enter into such agreement/arrangement, notwithstanding, any authorization obtained from any other authority such agreement/arrangement prior to its execution would require clearance from the Commission, as, prima facie, it has serious competition concerns and would attract the provisions of the Competition Act, 2010.
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