ISPAK Urges Not to Pay USF and ICT R&D Fund

Internet Service Providers Association of Pakistan (ISPAK) is seeking a facility for all the stakeholders to not to pay their contribution for Information Communication Technologies (ICT) Research and Development (R&D) Fund and Universal Service Fund (USF) due to government’s inaction in resolving the issues of these two funds.

In a news item produced in ‘The News’, it said that ISPAK has written a letter to Pakistan Telecommunication Authority (PTA), ISPAK has demanded that since last six months, government has miserably failed to resolve the serious issues being faced by both funds and any further contributions by the telecom operators should be stopped till both organizations are back on the track.

ICT R&D Fund and USF are both stuck in managerial issues for last 6 months or so. Both funds are operating without any budget in this fiscal year, resulting no operations and non-payment of salaries.

Cellular companies pay 1.5 percent of their annual revenues for USF and ICT R&D fund. It merits mentioning here that PTA collects this contribution from cellular companies at regular intervals and even imposes surcharges in case of late payments.

When contacted cellular companies, they showed their concerns over the situation, however, they said that they can’t stop paying the fund as its part of their license agreement.

At the same time cellular companies urged the Government to either get both the organizations working or otherwise spare cellular companies from paying billions of rupees of fund.

Cellular officials responded negatively, when asked if they have escalated this issue at authority’s level.

Following is the text of letter sent by ISPAK to PTA:

Internet Service Providers Association of Pakistan

(ISPAK)

No. 3(5)/2010

18 October 2010

Dr. Mohammad Yaseen

Chairman

Pakistan Telecommunication Authority

Islamabad

Subject:           State of Affairs of ICT R&D Fund and Universal Service Fund and Contributions by Telecom Operators

Dear Sir,

1.         Two important organizations created through sole contributions of telecom operators for promotion of telecom sector in the country have been forced to become practically dormant over last six months. All telecom operators of the country, as part of their licensed obligations, have been contributing a significant percentage of their annual gross revenues to these funds on regular basis since last many years.

2.         While telecom operators have been fulfilling their obligations earnestly and contributed billions of rupees to these funds in addition to payment of heavy taxes, the Government has miserably failed to fulfill its obligations, that were, to provide an efficient, professional and transparent organizational structure to utilize these funds for promotion of information communication technologies (ICT) and extend telecom infrastructure to under and un-served areas of the country.

3.         The gloomy state of affairs of both organizations is summarized as follows:

ICT R&D Fund

a. Last meeting of the Board of Directors (BOD) was held on 30 March 2010.

b. Company Secretary was ‘illegally’ sacked by the then Chairman BOD on 26 May 2010.

c. Financial and administrative powers of the Acting CEO were ‘illegally’ withdrawn by the then Chairman BOD in June 2010, thus leaving the organization unable to perform its functions.

d. Six independent directors of the Board were ‘illegally’ removed from the BOD by the then Chairman on 7 July 2010.

e. Despite the orders of Lahore High Court on suspension of the notification of removal of independent directors on 20 September 2010, no meeting of BOD has been convened by the Government, despite requisitions submitted by the majority of Board members.

f. Numerous projects of ICT R&D Fund being executed by the Universities and R&D organizations have been stopped due to non disbursement of funds by the organization. The executing agencies left with no budget for payment of salaries, have started laying off their researchers. This means that billions of rupees already invested in these projects are just going down the drain due to apathy of Government.

Universal Service Fund

g. Last meeting of BOD was held on 31 March 2010.

h. No grants for the approved and ongoing projects have been released by the Government thus halting the ongoing projects to extend telecom services in rural and un-served areas.

i. Payments to telecom operators for approved and competed projects have been stopped due to non-release of grants by the Government.

3.         PTA has been imposing penalties on telecom operators for even a day of delayed payments as contribution to R&D and US Funds but this blatant non-fulfillment of obligations by the Government has gone unchecked by the regulator. Nominees of the Federal Government on BODs of both organizations have also not played their legitimate role and did not make any effort to save these organizations from disaster.

5.         There have been rumors that Government is planning to divert the funds available with ICT R&D Fund and USF to some other ‘activities’ for political gain. Funds of both organizations have a specific mandate and their utilization by the Government for any purpose other than specified in the relevant statue, rules and regulations would be in excess of authority, ultra vires of the law and illegal.

6.         In view of above, we request that payments from the telecom operators to ICT R&D Fund and USF to PTA are kindly suspended till Government resolves pending issues of these organizations and bring them back on fully functional track.

With kind regards.

Yours truly.

Wahaj us Siraj

Convener

c.c.

1. Mrs. Nergis Sethi, Principal Secretary to the Prime Minister, Government of Pakistan, Islamabad

2. Mr. Naguib ullah Malik, Secretary, Ministry of IT, Government of Pakistan, Islamabad

3. Mr. Iqbal Awan, Additional Finance Secretary, Ministry of Finance, Government of Pakistan, Islamabad.

4. Mr. Nasrul Karim Ghaznavi, Member Finance, PTA, Islamabad.