Pakistan to Lower Mobile Termination Rates
The Pakistan Telecommunication Authority (PTA), has announced a reduction in the Mobile Termination Rates (MTR) with effect from 1st June 2008 by about 30% - although it also announced an increase in the rates for landlines.
The Authority after considering the results of cost models, international benchmarks and other factors, issued a short determination whereby MTR has been reduced by 28% over a period of two and half years. The regulator says that this reduction is mainly due to rapid growth in the mobile market of Pakistan. It is expected that the reduction in MTR would reduce fixed to mobile tariffs as well as off-net tariffs for cellular mobile operators resulting in more affordable telecom services for the general public.
For fixed-line telecom sector, the cost models showed higher interconnection charges for local termination, whereas for long-distance termination the results turned out to be lower than the existing applicable rates. However, the overall average termination rates are estimated to increase by about 8% over a period of two years. The regulator said that the changes in the fixed- line termination rates are mainly attributable to higher costs in maintaining and rolling out fixed-line access networks and reduction in traffic owing to shifting of traffic from traditional fixed-line networks to mobile networks.
PTA spokesman said that Pakistan is the first country in South Asia to have determined the interconnection charges based on Long Run Incremental Costs (LRIC). This step was taken in line with the deregulation policy of Government of Pakistan whereby PTA was assigned the task to determine cost-based interconnection charges for mobile and fixed-line operators, he added. According to the spokesman, keeping in view the significance and complexity of the task, the Authority engaged UK-based consultant Ovum to assist the Authority in determining interconnection charges using Fully Allocated Cost (FAC) under historical costing, bottom-up LRIC and international benchmarking.
Posted to the site on 11th May 2008