Cellular mobile operators (CMOs) have been given one month time by the telecom sector regulator to clarify inconsistencies in their on-net and off-net tariffs, which are leading towards unhealthy rivalry and price wars hence affecting the whole industry.
PTA has delivered a consultation paper emphasizing that though CMOs have constructive gross margins, some are sustaining losses. PTA has the power to adjust the prices of telecom services through Pakistan Telecommunication Re-organization Act.
PTA Asks CMOs to Explain Differences in On-net, Off-net Tariffs
Discernment between on-net and off-net tariffs which errands on-net calls forms a cult behavior whereby relevant users mace into a specific network to take benefit of lesser on-net call price.
CMOs contest on prices and provide low tariff to appeal users. Low prices are combined with numerous call packages, 17 is the minimum number of packages being offered by Warid Telecom whereas almost 153 packages are being presented by China Mobile Pakistan (Zong). PTA has also been given the recommendation of fixing a price floor which would basically curb the capacity of promotional offers being presented by CMOs.
Experts are of the view that setting of price floor will not be useful as price differs among operators. Though it might be probable for operators to agree on a definite price level among themselves.
Hassan Azhar, an expert, witnessed that because of the extreme unhealthy competition, telecom revenues have dropped in last few years and is also ensuing in subscribers assembling, mounting grey trafficking, divesting of fixed line from its due share and low revenues for Long Distance International (LDI) operators.
If steps are taken to level the on-net and off-net tariff or to slender the disparity, it would be constructive for entire industry in shape of less unhealthy competition within CMOs and abolition of anti-competitive behavior with fixed line operators.
Currently Pakistan has some of the lowermost mobile call charges in the world and the affordability of services has backed to remarkable subscribers progress. Conversely this has also caused lower profits, calling circles, endorsing grey trafficking and anti-competitive behavior of CMOs by divesting the fixed line operators of their due share.
In Pakistan, cellular operators are proposing belligerent limitless on-net calls and greater number of promotions packages i.e. Zong offering 158, Telenor 92 and Ufone 55 packages.
Moreover retributions generation of CMOs has wilted in past couple of years due to aggressive advertising campaigns and reduced charges provided by CMOs.