Understanding Telecom Policy 2015: Another Step Forward
Is Pakistan finally geared up for entering the digital age? The answer to this very basic question will remain unclear if one does not understand the Telecom Policy and the likely impact it may have on the industry and eventually on the consumer. The Telecom Industry in 2003 underwent a major change as the Government de-regularized the telecommunications sector under its “IT Policy 2000” followed by the “De-regulation Policy 2003”. This invited a number of international and local players to enter the Pakistani market bringing new products and services and making them affordable to a larger segment of the society. The privatization of PTCL in 2005 proved to be a decision that finally led to the restricted role of state in telecommunication sector-to that of a policy maker and regulator. The fact that the current role of the Government to keep itself out of the service arena, is something to be appreciated as all around the world the role of the Government is of a policy maker and facilitator whereas, the services are offered by the industry led by private sector.
Role of the Pakistani Government to keep itself out of the service arena and restricting itself to policy and regulation is something worth appreciating
Anyways, the previous policies of the Government from IT Policy to the Broadband Policy and more specific sectors were focused on total deregulation and establishment of the hard infrastructure i.e. availability of telecom services throughout the length and breadth of the country. With time, while the previous challenges have been addressed to certain level other remains unresolved. There also appeared new challenges for the sector as a natural phenomenon; which the new policies need to address in addition to the old ones.
In ICT Industry Status Quo is the biggest crime that should not be tolerated anymore and this goal can only be achieved if policies are accompanied by a Practical Implementation Strategy
A major case in point is the 3G licensing that basically was part and parcel of the previous policy but got delayed and was done last year through the NGSMA auction that now necessitates that the industry not only catch up with the roll out of the 3G services but also start off 4G services which should have been done earlier than this. Anyhow the current challenge for the new Telecom Policy 2015 is to provide not only an supportive environment to expand services and to ensure reach of basic infrastructure i.e. 3G/4G networks (and maybe start of 5G) but more so what kind of services and content pass through these information highways and how the state, industry, enterprise and consumers can benefit from them?
Two important points emerge from the above discussion that needs to be understood, first and foremost is that in the ICT Industry Status Quo is the biggest crime which cannot be tolerated anymore and equally important is that all good policies are accompanied by a Practical Implementation Strategy that should be followed in letter and spirit so that benefits can be reaped by all stakeholders. While, the current government may have inherited some industry challenges but there are humongous opportunities that can be reaped through future polices and their implementation but at a much faster pace.
In this regard, we have tried to analyze some major areas of the Telecom Policy 2015 highlight the impact and implication of this policy on the ICT Eco System and some areas that may have been left out of the policy scope or some that have been added but weren’t required.
Background, Policy Vision, Principles of Delivery and Policy Goals
The policy document could have been drafted more professionally and with better aesthetics could have been ensured as WB consultants were hired to do the job. The entire document seems to be quite disjointed as probably many people (at later stage of stakeholders’ meetings) contributed to the drafting exercise. The areas that needed more professionalism in drafting was the need to have updated figures of the industry of the same period throughout the document (some of them are of June while others are of February with no source where they are taken from). Most importantly the policy goals should have included some tangible targets like estimate for broadband subscribers, industry revenues, GDP share etc., for 2020 or 2025 which could have set the bases for speed of implementation and more importantly measuring success of the policy in due course of time.
The policy goals should have included some tangible targets to set the bases for implementation process
The positive aspect is that the future vision of policy and its goals are so open that it can accommodate any market driven implementation strategy.
The Telecom policy of 2015 has covered or touched upon a lot more areas which were not part of earlier policies. Some important areas being:
- Market & Services (Competition Rules, Licensing Framework, Transfer of Business, OTT, PTCL, Cross Border P2P, Public Wi-Fi)
- Infrastructure (RoW, Sharing, National Roaming, Disaster Management)
- Spectrum (Harmonization, Sharing, Trading, Testing, Mergers & Acquisition, Interference)
- Telecommunication Laws & Regulations (Type approval, Content and Legal Intercept)
- Satellite Services (Licensing)
- Public Sector Service Providers (Manufacturing)
- Policy Review & Implementation
- Market & Services (Competition Rules, Transfer of Business, limited Mobility for WLL, OTT, PTCL, Cross Border P2P, Public Wi-Fi)
Generally, this talks about a lot of things and could have been a major development but it has failed to highlight any policy regarding encouragement or incentivsation of local companies and investment in the telecom market. We could have earmarked sectors such as MVNO, local loop, Manufacturing, Distribution, Public Wi-Fi and others either exclusively or partially for local companies. Anyways let’s see some of the new policy points regarding development of market and services.
1.1 Competition Rules: Some separate rules are to be developed under this policy item for Telecom Industry; after which all competition related matters of the telecommunications sector will be governed by these new Telecom Competition rules.
Separate competition rules for telecom in the presence of CCP maybe an over kill and that too in 6 months seems a humongous task to achieve
This is a very complex matter and invites a debate as Competition Commission of Pakistan (CCP), an independent quasi-regulatory body, is responsible to ensure that competitive forces are unhindered in all spheres of commercial and economic activities in Pakistan; now separate rules maybe an over kill and that too in 6 months seems a humongous task to achieve.
1.2 Licensing Framework: Policy ensure continuity of current licensing regime with the addition of a new CVAS licensing for Satellite, since these services were operating in grey area. More importantly, it calls for PTA and MoITT to conduct periodic assessment for new licensing frameworks and policy with the 1st of such exercise to be held by year end. This essentially enables the MoITT & PTA to issue licensing periodically.
1.3 Transfer of Business: This is a good addition to the policy as the rules were mainly arbitrary and open to manipulation.
This should help existing companies that are struggling to survive to merge or be acquired. The immediate beneficiaries could be WLL players (the likes of Telecard, Worldcall etc.) as well as MNOs and most importantly the recently announced acquisition of Warid by Mobilink.
1.4 Single Mobility for Local Loop (LL) Licensees: Under this new policy, WLL operators especially PTCL will have to curtail its Data Services being provided through EVO & NITRO services. The MNOs now offering 3G/4G services feel that this is an infringement of their license domain, previously they did not push hard to restrict data mobility since they did not have any Data service to offer. The implementation of this policy essentially will be the last nail in WLL industry’s coffin as almost all operator expect PTCL has already been phased out. This restriction also surprisingly contradicts the policy vision and goals to ensure efficient use of technology, resources and other such statements made in the opening chapters of the policy.
1.5 Over the Top (OTT): Globally and even in Pakistan now OTT services (WhatsApp, Facebook, Skype, Viber etc.), have become increasingly popular and have been impacting traditional operators’ profitability. The policy necessitates to bring them under some licensing framework and at the same time giving flexibility to the MNO for having commercial arrangement with them independently. The fact remains that no framework exist that could achieve the objective of the policy and it remains unclear how it could be made possible. The other OTT services related to content (Netflix etc.) which is discussed later in the article, involves PEMRA as a content regulator.
1.6 PTCL: PTCL seems to be the favorite punching bag in the entire policy document. The policy makers probably overlooked the fact that the organization does not enjoy the monopolistic situation it had a decade back and is just a step away from being crumbled if policy and regulatory support is not provided immediately.
Policy necessitates to bring OTT services under some licensing framework but fact remains that no such successful framework exist
PTCL seems to be the only organization that has been mentioned by name in the policy document. PTCL SMP status is not due to its expansion strategy or huge subscriber base (rather they have been losing subscriber both for fixed and their WLL customer base for last couple of years and is on the negative growth) but the failure of other companies to expand their local loop business.
1.7 Cross Border Point to Point (bilateral) Links: Policy now allows LDI carriers to enter into international transit agreements with operators from other countries subjected to approval by PTA on a case to case basis.
While this policy also existed earlier but LDI operators were seldom allowed such facilities especially when it came to links with India and Afghanistan that probably are the most profitable business destinations for the LDI operators. With Pakistan’s strategic location it could really play a very important role in connecting the entire region horizontally and vertically.
1.8 Public Wi-Fi: While this is a new policy item, the impact is yet to be ascertained. No countrywide or even limited public Wi-Fi operator has emerged in Pakistan. PTCL could be a good candidate having extensive fixed network to offer such services in collaboration with some local distribution company.
Infrastructure (RoW, National Roaming, Disaster Management)
The main issues in the roll out of network in Pakistan are related to right of way, infrastructure sharing and increased cost. Additionally, dealing with multiple government entities and civic organizations are at play that necessitates inclusion of specific policy guidelines like having outside plant code, in-building cabling, use of utility infra and use of fibre that could provide relief to operators specially MNOs in rolling out network across the country. So these are a good addition to the policy document-most of them having specific deadlines for the MoITT and PTA.
MNOs themselves are to be blamed as they failed to agree on fair infrastructure sharing hence, damaging their businesses
However, the fact remains that MNOs themselves are to be blamed as they failed to agree on fair infrastructure sharing in the first place that would have greatly benefited them in terms of reducing CAPEX & OPEX and rolling out networks at a much accelerated pace.
2.1 Right of Way: Policy stresses that MoITT and PTA lead a coordinated and effective mechanism for speedy one window treatment for rights of way. While, MoITT/PTA could act as a middle-man between telecom operators and other relevant Ministries, Provincial Governments and the Council of Common Interest but on ground this still looks a very tedious task as some organizations such as DHAs and now the local Councils will continue to act arbitrarily. Anyhow the proposed new framework to be developed by July 2016 by MoITT has been left to the PTA for implementation that will need to enhance its capacity three fold to enforce such a framework.
2.2 Infrastructure Sharing: The policy identifies the significance and principles for infrastructure sharing. It should also have timelines defined as in other policy items to make this more practical and effective and at the same time benefiting the entire telecom industry specially the mobile eco-system.
2.3 National Roaming: This is a new and very good policy initiative if implemented properly, it could be very useful for the entire mobile ecosystem. This could not only reduce CAPEX and OPEX for the operators but will increase revenues as well. At the same time this could provide more value to customers, protect environment and increase profitability for operators.
Disaster Management is very relevant and important due to the nature of disasters that happens very often in Pakistan and Policy presents some very useful and practical steps in this regard
2.4 Disaster Management: This again is a new policy item that is very relevant and important due to the nature of disasters that happens very often in Pakistan such as earthquakes, floods and Law & order situations. The policy presents some very useful and practical steps for implementation.
Spectrum (Harmonization, Sharing, Trading, Testing, Mergers & Acquisition, Interference)
Pakistan mobile operators make up for almost over 75% of the telecom revenues and is no doubt the most important segment that will continue to grow for the time. Spectrum plays a very important role in development of this sector. The policy has touched upon some important areas relating to Spectrum Harmonization & Refarming, Sharing, Trading, and Testing, Mergers & Acquisition and interference and others.
3.1 Spectrum Harmonization, Refarming, Sharing & Mergers/acquisition etc. :
The policy provides some important guidelines for Spectrum Harmonization, Refarming, Trading, Sharing & Mergers/acquisition that shall go a long way in making better utilization of the fixed resources.
While the LTE launch by Warid has set a precedence for future refarming by the MNOs but important issues such as refarming or sharing of MMDS spectrum, completion of 850 Mhz chunk (Instaphone Spectrum) for future auction, Use & sharing of Warid-Mobilink and Ufone-PTCL combine merged spectrum utilization along with the cleaning up of leftover 2100 Mhz spectrum from WLL and availability of 700/800 Mhz are important areas that will also need very intense implementation strategies.
The important element in achieving these objectives will depend on good implementation that will require strong and competent leadership to coordinate these processes at MoITT, MoD, MoI&B (at the political level) & PTA, FAB and PEMRA (at the regulatory level).
3.2 Test Licenses: The need for test licenses for limited time use arouse before the launch of 3G/4G as some operators wanted to test vendor equipment for making infrastructure decision as well quality assessment.
Policy has focused more the mechanism of identification and import of quality devices that are fundamental to ensure quality mobile services
Although that objective has been achieved with current commercial deployment but the policy item does pave way for any such requirement especially if 5G or new spectrum/equipment is to be tested in future.
3.3 Interference Protection: Mobile operators have been effected in the past due to various interferences to their network and it would take years for them to be identified let alone resolved. The interference into GSM band for years and DECT phones in the 3G spectrum quite recently necessitated to cap the time for interference resolution. This policy item caps the time limit on the regulatory agencies i.e. FAB, PTA & PEMRA of 30 days to have such issue resolved once reported.
Telecommunication Laws & Regulations (Type Approval, Content Management and Lawful Intercept)
The telecommunication laws and regulation are quite widespread to the extent that the policy has given extension to the previous regulation on a number of issues. Three new areas that are worth mentioning, include Policy guidelines on type approval of equipment, content management and legal Intercept.
4.1 Type Approval: While type approval of telecom equipment is an old issue but this time policy has focused more on the mechanism of identification and on the import of the mobile device. This is primarily because of the necessity as mobile phone devices are now increasingly used (or misused) for security, health, banking and other applications and if not controlled may result in catastrophe. Not only this but to ensure some regulatory control on imports of quality devices that are fundamental to ensure the quality for network operators i.e. the better the devices the better will be quality of network. The policy would require human resource and technical capacity building of the regulator plus support from the operators and the consumer itself to achieve this.
4.2 Content Management on Internet: This is again a very important Policy area that identifies PTA to manage and regulate content over the internet irrespective of the channel used for its supply. The policy allows PTA to devise a well-defined framework to monitor and manage content that shall include any blasphemous or pornographic material.
A well-managed content will definitely help in avoiding incidents like YouTube in future which has been blocked in Pakistan. While, the policy empowers content to be regulated it will need to coordinate this aspect with PEMRA that issues licenses such as Mobile TV, IPTV etc., and then also a CVAS license from PTA- such content licenses should essentially be licensed by PTA only without the need to for separate license from PEMRA for effective regulations avoiding duplicity to ensure that Pakistan will not stay behind and channels like YouTube, Dailymotion etc., remain accessible for all.
4.3 Lawful Interception: Among many additions, rules for Lawful Interception (LI) are important as licensing KPI and cost of services are effected if these are not well managed.
Important element to achieve the objectives of spectrum harmonization will depend on good implementation that will require strong and competent ICT leadership
Since, there are multiple LEAs in Pakistan it becomes very important that PTA plays a coordinating role to ensure that the requirements for Lawful Intercept are well balanced for both national security and the industry alike.
The policy regarding satellite commination and licensing has been quite vague in Pakistan and most issues were created because of the un-regulated market. The policy recommends issuance of a new category of CVAS license for the marketing of bandwidth by satellite operators and provide guidance for GMPCS services and terminals use in Pakistan.
Public Sector Service Providers
The policy for some reason has vaguely addressed the issue of manufacturing alongside public sector service providers who could have been addressed under the telecommunication infrastructure head. It could be for reason that TIP is a government entity. Anyhow, the government should have done some homework to provide specific policy guidance to rejuvenate TIP or the manufacturing industry that remains a challenge in Pakistan as it would need to be incentivize for making it a viable proposition.
The presence of two separate regulatory bodies i.e. PTA and PEMRA have not only added to the confusion but organizational inefficiencies.
Content licenses using telco networks should essentially be licensed by PTA only, without the need for separate license from PEMRA
The policy has rightly indicated that there should be one regulator as is the practice in most countries and have given some roadmap on this mammoth task to be undertaken. While the policy guidelines are fine as the success of this would largely be dependent upon the political will to follow implementation guidelines.
Policy Review & Implementation
Even the best of policies fail because of faulty implementation plan. The policy review and implementation in the policy document does have only broad guidelines and devil would be in the details specially the seriousness at the MoITT & PTA to follow-up on the policy guidelines. They will also need to engage the industry if the policy implementation has to made a successful. Last but not the least, both the MoITT and the PTA will have to undergo a drastic capacity building exercise to ensure that the policy objective are achieved.
Missing Elements in the Policy Although the long-awaited policy document addressed most of the issues facing the telecom sector but some important elements are still missing which should have been part of the policy including:
Inclusion of Information Technology as part and parcel of the policy document so that it could be called an ICT Policy or Convergence Policy rather Telecom Policy as is the trend globally.
The policy should have given some guidelines for PTA and the industry on Alternate Dispute Resolution (ADR) as there are over hundred of litigations some of them very minor which could easily be resolved through ADR, saving a lot of cost and resources to focus on development.
The policy has not been able to offer any incentive or identified any segment or initiative that could provide encouragement to local players/investors to enter the industry. Some sectors such as MVNO, Manufacturing/assembly, application, content etc. could be made exclusive or partially reserved for local investor as is done in other countries.
The policy also did not clearly reflect the structure of tax rationalization framework. The policy should be reflective of commitments rather than only proposals. Although, it is said that MoITT is working on a tax package separately.
The policy should also provide some clear targets and goals for the future that will provide the speed and resource required for implementation and will also ensure that the policy goals and achievements can been measured over a period of time.
Government can review this policy after five years taking into consideration the changing market and other developments in the industry. Until now the Telecom Policy 2015 has got positive response from the industry but it still quite early and much of the impact is dependent on its implementation. The MoITT has also announced that they are still open to consultations, which is a healthy sign as they conduct policy review. Again, the Telecom Policy 2015 is an important development. Ensuring its successful implementation will be the next important phase.
MoITT and the PTA will have to undergo a drastic capacity building exercise to ensure that the policy objective are achieved
The Telecommunications Policy 2015 addresses a large number of issues facing the industry particularly cellular mobile operators (CMOs) who are seeing the new policy as a positive development that will strengthen the telecom sector. The Telecom Policy 2015 aims to facilitate the attainment of an all-embracing national agenda and to transform Pakistan into an economically vibrant, knowledge-based, middle-income country by 2025. It is expected to address many issues facing the telecom sector and hopefully should be closely followed by a comprehensive IT policy – preferably in early 2016. As the IT State Minister Ms. Anusha Rehman said, “The government shall provide a clear path to the information technology sector for the next five years”; so let’s hope that it will direct Pakistan towards technologically prosperous nation. We must remain optimistic that the upcoming year will be better than the previous year as mobile broadband will continue to drive the ICT growth.