CCP Hammers PTCL for Anti-Competitive DSL Pricings

PTCL-logoA Competition Commission of Pakistan (CCP) inquiry team has decided that commission will commence legal proceedings against PTCL, said a report issued by Competition Commission of Pakistan.

CCP inquiry said that PTCL is likely to face legal action under Section 30 for prima facie violation of Section 3(1) read with Section 3 (2) of the Competition Act by monopolizing the market by offering anti-competitive DSL tariffs, that could lead other broadband companies to quit businesses.

Complaint Against PTCL

PTCL was facing an inquiry from CCP based on a complaint filed by Aqlaal Advocates on behalf of their clients Mircronet, LINKdotNET and Nexlinx by alleging that under the current regime for provision of Digital Subscriber Line (DSL) services, DSL Operators are dependent upon the infrastructure of PTCL as it owns and controls the required copper line infrastructure.

Complainant alleged that PTCL refuses to provide access to its copper infrastructure by refusing to cater requests of DSL Operators for issuance of new connections in a timely manner as required by SOP on DSL services.

The DSL Operators submitted that PTA informed the DSL Operators that such delays were caused in December 2009 as PTCL was upgrading its system. However, the DSL Operators have stated that PTCL was issuing new connections to its own customers during this period of system up gradation. PTCL has denied that it issued any new connections at the time the DSL Operators were not being issued new connections.

Complaint said that PTCL has shifted its public switched telephone network (PSTN) consumer numbers from the copper network to an optical fiber network which the DSL Operators do not have access to.

DSL operators said that PTCL has not only violated PTA’s Numbering Plan Regulations, 2005 but also clause 7.2.1 of the IA and PTA’s determination No. 15-70/07 (CA)/PTA dated August 3, 2007, according to which PTCL may not change the copper pair of a customer to optical fiber without the customers consent

DSL operators further alleged PTCL for creating operational problems for the DSL Operators, such as denial of their authorized staff to enter PTCL exchanges in violation of clause 7.2.1 (c) of the IA, delaying provision of infrastructure, cutting of cables, refusal to
provide collocation space, etc.

It was further added in complaint that PTCL has forcefully disconnected the connections of the DSL Operators provided to customers and started providing these customers DSL services through PTCL‟s DSL connection without even informing the customers.

Operators alleged that PTCL, through cross-subsidization and predatory pricing, is driving competitors out of the DSL market in violation of Section 3 (3) (f) of the Act, Section 26 (e) of the Pakistan Telecommunication (ReOrganization) Act, 1996 (the “PTA Act”) and Article 11 of Schedule 2 of the 2000 Rules.

PTCL’s Response:

PTCL in its response to complaint said that the determination of PTA that PTCL holds a dominant position has been challenged before LHC, Rawalpindi Bench and has been suspended. The matter is sub-judice and the complaint is an attempt to frustrate the judicial process.

PTCL said that it reserves the right to challenge the validity of the Act and constitution of
the Commission at an appropriate forum as the Commission lacks jurisdiction in this respect

PTCL said that the complaint incorrectly defines DSL as a service in the market, when it is merely one technology for provision of Broadband Internet Access. Therefore, it cannot be said that consumers cannot interchange or substitute the DSL technology for other technologies.

PTCL mocked by saying that the DSL Operators misunderstand the concept of predatory pricing which is clear as the allegations have not been substantiated by any legal argument.

PTCL in its reply said that it is incorrect that the DSL Operators are solely dependent upon PTCL for infrastructure as Nayatel provides broadband services through use of optical fiber technology (FTTH) instead of depending upon PTCL’s copper lines.

PTCL said that there have been exceptions where extra time has been required by the DSL Operators have been timely informed by PTCL and PTA. PTCL customers were not given preference over DSL Operators customers and had to face the same problems.

The fault incidence is not attributed to PTCL only as numerous external factors are also responsible, such as poor in-house wiring, large scale damage to PTCL outside plant, utility companies, malicious cable cuts and theft and right of way (ROW).

PTCL denied that it has forcefully disconnected customers of other DSL Operators and only provides services on request of customers. PTCL also informed that it has offered the ISPs to work in partnership with PTCL for its white label DSL broadband services on revenue sharing basis. Under which PTCL will provide end to network infrastructure and resources and DSL Operators will provide marketing, sales, provision and installation of customer premises equipment, billing and revenue collection and after sales support services.

CCP Inquiry Findings:

Based on investigation conducted by CCP team, the findings of cost analysis suggested that the margins in the DSL retail market due to PTCL’s pricing for the access to its copper network are insufficient for an efficient competitor to operate profitably.

The analysis of financial statements of DSL Operators appears to confirm that as a result of such low prices the profit margins of DSL Operators have gradually reduced and now they are operating under huge losses. Many of the players in the DSL retail market have exited the market.

The cost analysis of PTCLs DSL operations shows that it has been able to record profits despite offering very low retail prices and having very low margins. PTCL being a vertically integrated company, its DSL business does not incur/record some of the expenses such as co-location charges, copper pair rent, additional overheads etc. that other operators have to bear.

Additionally, the offers like double the speed without additional cost, upgrading of package etc are impossible for the competitors of PTCL to match.

Resultantly, prima facie, DSL operators are losing market shares and incurring huge operational losses and if this continues, it may lead to exclusion of further competitors and thus monopolizing the relevant market by PTCL.

Inquiry report said that lower tariffs are beneficial for the customers and are a good way to penetrate in a growing market for DSL based broadband services. However, such low tariffs and low margins are making this market unattractive for further investment, research and development.

This may result in competitors leaving the market and creating a monopolistic situation in the long run, thus leaving the customers on the mercy of a super dominant player who will be at its free will to exploit customers.

In light of its findings, inquiry team  proposed that proceedings under Section 30 may be initiated against PTCL for prima facie violation of Section 3(1) read with Section 3 (2) of the Act.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK

  • Wow CCP ke kia baat hai. PTCL has increased its prices in the last one year and CCP finds its pricing anti competitive.

    Simply show that public sector entities live in another world.

      • But that doesnt come under Anti Competitive Pricing specially when wholesale prices are spiralling down and retail prices are being increased on account of inflationary reasons etc. that includes market dominance as well.

        • It does when the hold the dominant position by preventing other providers from using their services (colocating in exchanges, letting engineers visit exchanges, use fiber phone lines, etc). They did not just lower prices, the large part of the complaint is that they refused to let other providers deal with customers effectively.

          • Not being able to handle customers effectively is a genuine complaint but then PTCL is hardly known for good customer care :).

        • And also, as far as wholesale prices go, well, ITI (by PTCL) is one of the largest seller of wholesale bandwidth! Doesn’t that let them control the prices?

          • THe competition in broadband market is not dependent on the DSL operators they were only significant when market wasnt open.

            Now broadband competition has different flavours, WImax, EVDO, Copper, HFC cable and FTTX.

            DSL operators account for about 30-40k subscribers and that is too insignificant a size to be worried about. The competion in broadband today is not dependent on PTCL’s wholesale services and it is a known fact that bandwidth prices are spiralling down owing to competition between TWA and PTCL

    • :D Man you know nothing about competition :D
      in competition prices are reduced not increased therefore CCP found it anti-competitive :D

  • All the allegations are 100% true….
    You will see majority of the wired & wireless broadband ISPs closing their businesses in near future. :(

    • Because the investment in this business is not viable for a new entrant that doesnt have access network in fixed line or doenst have the volume as in the case of dsl operators.

      For wimax the blame again goes on the inefficient spectrum allocation in 3.5 GHz band instead of 2.5 GHz where Wimax would have been more cost effective and would have given a tough time to PTCL

  • Finally, someone had the guts to print this without fear that the PTCL will cut the advertising!

    When I was working in Pakistan, PTCLs monopoly was at its height. I remember at a time we were approached for funding to a well known ISP of the time for their DSL service expansion but PTCL just abused its monopoly and convinced PTA that the ONU which has the same last mile copper (only some portion is on fiber) should not be part of deregulation. PTA which is basically PTCLs donkey agreed and look the other way as local DSL providers were prevented from using PTCL copper from ONU and PTCL kept adding ONUs and replacing peoples telephone lines with ONU lines thus stopping any DSL service provider except itself from providing DSL services.

    I am glad CCP has finally taken up this complaint. Sadly it is very late and all these DSL operators are now dead or almost dead.

    Sad ending to this story is that PTCL is now Arab company and the casualties on the battlefield are Pakistani DSL operators (Micronet, Nexlinx, Cyber.Net) nuked by Etisalat/PTCL monopoly and helped by the [email protected] of PTA.

    • Economies of scale driven businesses witness such trends. Payphones died their own death but PTCL was accused of anti competitive pricing even then.

      Incumbents all over the world are accused of anti competitive practices and many a times accusations are valid.

      In case of Pakistan it is the easiest to put the bblame without any independent verification and all we have is poulism in this country when it comes to complex issues.

      What do we have to explain for Wimax operators? all of them are in losses even at Gross level?

      While PTCL is increaing prices how can it be termed as anti competitve?

      I wish we could be more objective in our criticism.

      • I have a suggestion: have PTCL spin off into separate entities their ITI and DSL/evo markets and then let’s see if they can sink or swim.

  • @Subhanallah
    I agreed with your statements but Pakistan companies will not die. Look at Micronet and Nayatel. They dominate in Islamabad. Nexlinx has strong position in Lahore. CYBERNET has strong position in Karachi and many other cities. So please have faith in your Pakistani companies. Once this economy comes back you will see all these company rise. I am agreed about PTA behavior under previous government. First they have sold Pakistan national asset the ptcl to foreign company and then killed off local company. Pakistan have no single large Pakistan mobile company . This is very shameful. Compare to India where local company rules in every sector of economy. PTA under musharraf govt was sell out and traitor to people of Pakistan.

    • I am a former Nexlinx customer. Who uses Nexlinx other than corporate clients? Are home users rushing to Nexlinx? No.

      Same with other companies. Their userbase is not growning among the household market (the largest market).

  • PTCL users ko force karta hai apna connection leny pe agar koi user dosray operator k connection k liye apply karay to PTCL walay Jumper hi nai lagany dety exchange main aur kisi ka lag b jaye to PTCL walay bech main panga lety rehty hain bar bar disconnect aur slow speed aur jb user tang aa k PTCL ka connection lagwa lay to thek chalna shuru ho jata hai ab agar ye problem dosray operator ki ho to jin k pehlay se connection lagay hoye hain un k sath q nai hoti problem same time aur line etc main b koi changing nai hoti to PTCL ka connection q thek chalta hai? 2011 se pehlay k dosray operator k connection thek chal rehay hain lekin bad k jitnay b new connection lagay PTCL ne pangay dal k band karwa diye aur jin k 2011 se pehlay k connection hain unko b PTCL ki taraf se bar bar call aati hai k PTCL pe move ho jain. PTCL going to very kamini aur harami company

  • Good Job Done By Competition Commission of Pakistan (CCP).

    I am facing the Hell of PTCL’s Poor Complaint Resolution. The WORST ever part of PTCL’s mis-deeds.

    PTCL has become so painful for its customers they their services are disconnected regularly twice in a month and they take 2 days to a week per complaint.

    PTCL is the big hindrance in creating an atmosphere of competition in DSL Broadband.

    PTCL is sitting on the infrastructure like a Snake……

    CCP, for God’s Sake, do something to bring competitors like NayaTel, LinkdotNet and MicroNet etc to provide us an option to leave NONSENSE PTCL.

  • GREAT CCP. It means there are some institutions who are working without the fear of PTCL. PTCL is killing the small operators so that they can be the only player in the market. Everyone knows that the PTCL is providing pathetic services to end users. Even in this competitive market nobody in PTCL willing to listen the complaints of the customers and if there will be no competitor of PTCL in market they will not even care about the customer. Everyone knows the culture of PTCL.
    Most of us expect that PTA is the regulator and it’s the responsibility of PTA to handle this type of issues but unfortunately PTA is also subsidiary of PTCL and they are working against their own VISION. Thanks to CCP who take the initiative. I would also request to CCP to issue show cause notice to PTA as well and ask them that why they are sleeping. PTA has complete record of all telecom operators then why they didn’t take any action for the betterment of the industry.
    We know that it’s too late but i think somebody takes this action and I want to appreciate the efforts of CCP. This is indeed a great effort of the staff of CCP.

  • i have to face Problems regarding disconnections, slow speed etc from PTCL these days, which i never faced before. No matter how much you complaint they dont care about it.

  • PTCL prices is very high specially in city like Quetta where no other competitor exists…:(

    CCP ur work is appreciated

  • I must say congratulations to Linkdonet and Micronet for taking such a bold initiative. They are true warriors. I am surprised to see that Wateen, Witribe and Qubee are not saying anything when they should be speaking most about this predator pricing. May be they have accepted defeat and are going to exit Pakistan soon. Allah khair kareh hum consumers ka.

    Also Transworld is sleeping even when it know that if PTCL grows and kills competition it is only sure Transworld will have to close down because PTCL will only get its bandwidth from ITI, which is its own company. Everybody knows Transworld quality is better but PTCL has 3 landing station now and much lower cost than Transowrld.

    I am very much surprised that not more companies are joining in this fight… Maybe all are scared of the PTCL Giant in the Dishdasha or then there is some deal between Etisalat and all these companies. Wateen is also owned by same Shaikhs at the top as PTCL,Etisalat

    Pakistani users key to lag gayee:( CCP need to control PTA.

  • Another Fraud By PTCL
    PTCL advertises that they offer 2mbps DSL at the cost of Rs.1499 whereas they are charging at least 10% extra to all the subscribers.

    This is the rule that whenever your PTCL bill crosses Rs.1000 they apply FED (5%) and with holding tax (6%) to the overall amount.

    I was paying approximately Rs.500 before activating the DSL and now I am paying more than Rs.2200

    shame on you PTCL for seducing your customers

    • I have failed to understand wht exactly you mean by this post…
      “”I was paying approximately Rs.500 before activating the DSL and now I am paying more than Rs.2200″””
      what is this suppose to mean?? i guess you want to pay only 500 + 1499 = 1999 ??? lol..

  • oh get lost qubee and link dot net official coming here and crying like babies .. you people actually want us to pay more for your low quality services get lost

    • Quality can be improved but it costs some basic minimum value. Because of PTCL everyone is forced to reduce prices to the point where quality must be compromised…

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