LDI operator might create cartel to compete with the ICH players


The fate of International Clearing House (ICH) hangs in the balance after one of the LDI operators announced that it was no more part of this controversial agreement.

Sources in the telecom industry said some other major players were also considering following in the footsteps of the LDI operator and might create an undisclosed cartel to compete with the ICH players. The News claimed.

The participants of this undisclosed cartel would likely be the major players who were previously handling the major international calling traffic in Pakistan.Sources said these players will lower their international calling rates compared to the ICH rate so as to attract more international calls traffic, they added.

Interestingly, both the Ministry of Information and Technology (MoIT)) and Pakistan Telecommunication Authority (PTA) are unable to comment on the legality of ICH after the stepping out of one LDI operator, as the aspect was not clear in the policy directive of the ICH.

The PTA official said no role was assigned to it under the ICH policy directive while the MoIT official said the regulator had the power to take regulatory action against any LDI license holder.

The PTA official said they were not looking after the ICH, while the role of settling the issue under the ICH policy directive had been assigned to the MoIT. He said no one was technically dealing with the ICH in the PTA, as the MoIT had taken the charge of it.

“Even if the MoIT asked the regulator to take action then it has to make an amendment to the ICH policy so that the PTA was able to initiate action,” he added.

Interestingly, the LDI operators were also not in picture about the status of the ICH after stepping out of one LDI operators from the consortium. Apparently, it seems the ICH will be no more in the coming days, as it was controversial since it creation, said a top official of a leading LDI operator. He said internally the company had felt that the ICH was going to close shortly.

He said technically the role of regulator went with the leading LDI operator of the country that was controlling and defining the shares of the other LDI operators. He said the other LDI operators had objections to it and were seeking revision of their share which was not accepted by the virtual regulator.

An official spokesperson for the Ministry of Information and Technology Yasir Qadir said the ministry had not received any intimation from one of the LDI operators about its stepping out of the ICH. He said the future course of action against the LDI operator will be decided after official intimation.

The PTA spokesperson also said the authority had not received any intimation from the LDI operator. Interestingly, under the ICH policy none of the consortium players is bound to intimate the MoIT or PTA to leave it.

An official spokesperson in a reply said: “An operator has raised concerns about MTR-I and APC a number of times with the relevant authorities. We had also intimated PTA and Ministry of IT & Telecom through letter dated 19th December 2013 that we will exit the ICH agreement by 31st December 2013 if our concerns were not addressed properly. In response, we were asked in a meeting held at the PTA Headquarters on 27th December 2013 to maintain the status quo till 7th January 2014 as recommendations for the resolution of MTR-I issue were being forwarded to the MoIT. However, till last week there was no further development on this and resultantly we were left with no option but to exit the ICH on 25th January 2014.”

According to the documents available with The News, the LDI operator in its letter to the Chairman PTA Dr Ismail Shah dated December 19, 2013 pointed out the issues raised by the Cellular Mobile Operators (CMOs) since creation of the ICH on Mobile Termination Rate for International Incoming Traffic (MTR-I).

The letter stated: “As part of the MoIT’s policy directive for the establishment of ICH implemented in October 2012, a spate MTR-I was proposed for the mobile operators which was condition precedent to supporting the said directive by CMOs and is the only component yet to be determined by the PTA in consultation with the MoIT even after lapse of more than a year”.

As a result of it, the CMOs intentional incoming traffic after the ICH has been reduced by 75 per cent causing revenue loss to them. The CMOs incurred almost Rs15 billion loss due to this.

Following the letter of the LDI operator, the PTA conducted a meeting under its chairman on December 27, 2013 in which all consortium players participated.

The meeting decided to maintain status quo with regard to the ICH agreement till January 7, 2014 while the PTA will send its recommendations to MoIT with a request to finalise the issue of MTR-I by January 6, 2014.

The meeting minutes stated that the chairman PTA had advised the ICH consortium and CMOs to enter into a commercial agreement on their own that includes sharing of revenue with CMOs in form of MTR-I. The industry may come up with a commercial agreement relating to MTR-I so that their suggestions may be forwarded to MoIT for a conclusive decision with a recommendation of some portion of APC or USF.

The chairman PTA said if an agreement between the CMOs and LDI operator was not reached, necessary changes in the ICH regime and reduction in rates will be carried out. Therefore, it will be better that a gradual and workable mechanism between the CMOs and LDI operators may be carried out and rates should be kept in place for at least six months.

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