India can no longer claim of having being amongst the world’s lowest telecom tariffs”, as Pakistan boasts of far more competitive mobile services, especially for international (ISD) calls.

So while Indian telecom consumers have been celebrating the benefits of competition and low calling rates, they can now happily push operators and telecom regulators to lower their tariffs further.

The International calls to some of the most frequently called countries from India and Pakistan - such as United States of America (USA), United Kingdom (UK), Canada, Germany and Hong Kong - present a stark comparison of how Pakistani mobile users are so much better-off than the Indians.

“Pakistani operators offer such ISD calls at rates as low as (Pakistani) Rs 1-1.99 per minute. In comparison, Indian mobile subscribers are still paying Rs. 5-6 per minute to call these countries.      In some cases, the ISD rates from Pakistan while calling mobile phones in these countries are slightly higher, but far lower than those available to Indian consumers,” says Shalini Singh, a renowned journalist of India, wrote in an article recently published in a leading Indian newspaper.

Ironically, she said, an Indo-Pak dialogue is the most damaging to the wallets of people on either side. Both Indian and Pakistani mobile users have to pay Rs. 8 to 9 per minute when calling each other. A call from Lahore to New York (a 15-hour flight) costs Rs.1 per minute, while a call between Lahore and Amritsar (a 15-minute flight) costs a whopping Rs. 9 per minute in either direction, he added.

“Even where local calls from mobiles are concerned, some Pakistani operators offer rates as low as 30 to 50 paisa per minute, especially when calling within their own networks”.

“A range of incumbents and new operators in Pakistan such as Mobilink, Ufone, Telenor, Warid (Singtel) and Zong (China Mobile) in strong competitive play are responsible for these low rates.

The Etisalat-owned Ufone is among the most aggressive price warriors. Together, these operators serve nearly 85.02 million subscribers across Pakistan,” she added.

Nearly 53 of every 199 Pakistanis have access to a mobile phone, which is more than double of India’s mobile teledensity - currently hovering around 24 mobile phones per 100 citizens.

Moreover, Pakistan Telecommunication Authority (PTA), has reduced Mobile Termination Rates (MTR) with effect from 1st June 2008 by about 30 percent.      The Authority announced cost-based interconnection (termination) charges for fixed-line as well as cellular mobile operators vide its recent determination.      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 percent i.e. from Rs.1.25/- to Rs.0.90/- over a period of two-and-a-half years (2.5 years).      This reduction is mainly due to the 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.

In this connection, hearings were conducted by the Authority on February 26, 2008, and April 30, 2008, comprising Chairman PTA, Major General (retired) Shahzada Alam Malik, Member Finance, Syed Nasrul Karim A Ghaznavi and Member Technical, Dr. Mohammad Yasin and were attended by Chief Executive Officers of the Mobile, Local Loop and Long Distance International Operators.      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 percent over a period of two years. 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 oftraffic from traditional fixed-line networks to mobile networks.

When contacted, 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 the government 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 M/S Ovum plc. to assist the Authority in determining interconnection charges using Fully Allocated Cost (FAC) under historical costing, bottom-up LRIC and international benchmarking.

It may be noted that interconnection charges play an important role in promoting investment, competition and growth of the telecom sector in any country.      The cost based interconnection charges also help in improving economic and technical efficiency of telecom operators.

Internationally, LRIC methodology is used in many developed countries such as USA, UK, Sweden, Malaysia etc and has been declared to be the most efficient costing methodology in determining interconnection charges.

Likewise in other countries, the project took more than a year to complete due to thorough industry consultation and immense financial & technical data requirement from the operators.

To make the process fully transparent, the cost models developed by the Authority were shared with the concerned operators.

It may be mentioned that this decision will have far-reaching impact on the growth and investment in the telecom sector of Pakistan, as interconnection rates are critical input for proliferation of basic telecommunication services.      At present, Pakistan has around 56.7 percent of combined tele-density, which is expected to increase further specially providing impetus to the fixed-line telecommunications market These decisions contribute towards creating a healthy competition among the CMTOs who continue to strive for improvement of their service in order to attract new subscribers.

It is evident that PTA is carrying out its mandated mission with a sense of commitment so as to introduce new technology and improve the service with the basic aim of providing the best service at most economical rates to the subscribers.