Briefing
By Rahnuma · AI-generatedThe Telecom Deregulation Policy, issued July 2003 by the Ministry of Information Technology, ended PTCL's exclusive rights to provide basic telephone services (expired December 31, 2002 per Section 1.3) and opened Pakistan's fixed-line telecom market to competition. The policy establishes two license categories: Local Loop (LL) licenses for fixed-line service within PTCL regions, and Long Distance & International (LDI) licenses for nationwide service (Section 4). Key provisions include technology-neutral licensing (Section 12), the establishment of a Universal Service Fund (Section 5), Access Promotion Contribution mechanisms (Section 4.3), and obligations on PTCL to facilitate interconnection (Section 4.6). The policy aims to increase teledensity, promote private investment, and ensure affordable telecom services while safeguarding national security.
Plain-language explanation
The 2003 Telecom Deregulation Policy opened Pakistan's fixed-line telephone market by ending PTCL's government-granted monopoly that expired on December 31, 2002. Before this policy, PTCL controlled all local, long-distance, and international calls as Pakistan's sole provider. Now, any company can apply for two types of licenses: Local Loop (LL) licenses allow serving customers within a specific region for approximately $10,000, while Long Distance & International (LDI) licenses cost around $500,000 and allow nationwide operations. For example, a new company could get an LL license to provide telephone service in Lahore only, competing directly with PTCL in that city. LDI operators must own at least half their network infrastructure after three years and commit to building connections across Pakistan within three years. Revenue from international calls terminating in Pakistan will be shared between LDI and LL operators to fund network expansion in underserved areas. All operators must contribute to a Universal Service Fund (max 1.5% of revenue) to bring telecom services to rural Pakistan, where PTCL must still install at least 83,000 new lines annually through 2008.
Compliance & opportunity checklist
- Apply for LL license (US$10,000 fee) or LDI license (US$500,000 fee) through PTA per Section 4
- Post US$10 million performance bond if obtaining LDI license for infrastructure rollout per Section 4.2.1
- Establish Point of Interconnect in 5 of 13 PTCL regions within 1 year, all regions within 3 years per Section 4.2.1
- Pay annual PTA regulatory fee (max 0.5% of gross revenue) and contribute 1% to R&D Fund per Section 4.2.3.4-5
- Comply with 50% infrastructure ownership requirement by year 3 for LDI per Section 4.2.1
- Register with Universal Service Fund and contribute max 1.5% of gross revenue per Section 5.9
- Enable call interception capabilities per Section 4.2.3.3 for national security compliance
- File quarterly reports on quality, network implementation, revenues, and minutes to PTA per Section 4.2.3.1
Key numbers
LL License Fee
10000 USD equivalent in Pak rupees
· Section 4
LDI License Fee
500000 USD equivalent in Pak rupees
· Section 4
LDI Performance Bond
10000000 USD
· Section 4.2.1
Annual PTA Regulatory Fee
0.5 % of gross revenue
annual · Section 4.2.3.4
R&D Fund Contribution
1 % of gross revenue
annual · Section 4.2.3.5
USF Charge
1.5 % of gross revenue
maximum · Section 5.9
LDI APC Retention (Incoming International)
0.06 USD per minute
up to · Section 4.3.3
PTCL Exclusive Rights Expiry
31-Dec-2002
· Section 1.3
LDI Rollout (5 of 13 PTCL Regions)
1 year from license award
from license award · Section 4.2.1
LDI Rollout (All 13 PTCL Regions)
3 years from license award
from license award · Section 4.2.1
LDI Infrastructure Ownership Year 1
10 %
year 1 · Section 4.2.1
LDI Infrastructure Ownership Year 2
30 %
year 2 · Section 4.2.1
LDI Infrastructure Ownership Year 3
50 %
year 3 · Section 4.2.1
Spectrum Withdrawal (No Rollout)
18 months from spectrum award
· Section 4.4.3
PTCL Rural Rollout Obligation
83000 new lines per annum
until end 2008 · Section 4.6.6
PTCL Regions
13 regions
· Section 4.2.1
Policy Validity
5 years from implementation
· Section 10.1
License Validity
20 years
· Section 10.1
Frequently asked
By Rahnuma · AI-generatedWhat are the fees and financial requirements to obtain a telecom license under this policy?
LL licenses cost US$10,000 equivalent in Pakistani rupees, while LDI licenses cost US$500,000. Additionally, LDI licensees must provide a US$10 million performance bond for infrastructure and rollout targets (Section 4.2.1). Annual PTA regulatory fees are capped at 0.5% of gross revenue minus inter-operator payments, and licensees must contribute 1% of gross revenue to an R&D Fund (Section 4.2.3.4-5).
What are the rollout obligations for new fixed-line operators?
LDI licensees must establish Points of Interconnect in 5 of 13 PTCL regions within one year and all 13 regions within three years (Section 4.2.1). They must own at least 10% of their transmission network in year one, rising to 50% by year three. Failure to begin operations within 18 months of spectrum allocation may result in license cancellation (Section 4.4.3). LL licensees must build and operate at least one Point of Interconnect in each licensed PTCL region within prescribed periods (Section 4.2.2).
How does the Access Promotion Contribution (APC) mechanism work?
LDI licensees may retain up to 6 US cents per minute of termination charges for international incoming calls, with the remaining amount passed to LL licensees to promote infrastructure development and teledensity (Section 4.3.3). After policy review, revenue sharing will be determined by PTA using a Long Run Incremental Cost (LRIC) formula. PTA will supervise bilateral accounting rate negotiations and monitor traffic to prevent fraud (Section 4.3.6).
What interconnection rights and obligations exist under this policy?
Both LL and LDI licensees have rights to interconnection, leased lines, and co-location facilities from incumbents (Section 4.5.1). PTCL must prepare 50% of local switching units for interconnection within one year and the remainder within three years (Section 4.6.1). Initial interconnection prices will be based on international benchmarks pending PTCL's development of unbundled cost accounts. PTCL must enable Indirect Access (carrier selection) within one year (Section 4.6.1).
What are the Universal Service Fund requirements and how is it financed?
The USF will be financed by a Universal Service Fund charge paid by all basic telecommunication service licensees, capped at maximum 1.5% of gross revenue minus inter-operator payments (Section 5.9). Premium from APC on cellular termination rates will also be diverted to the USF from a future date to be notified (Section 4.3.4, 5.7). Disbursement will occur through transparent, non-discriminatory competitive processes to expand basic services and Internet access in underserved areas (Section 5.6).
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