Understanding ICH: Revenues Go to LDI Operators, not to National Exchequer

SwissBanksPakistaniMoneyThere has been a misconception about the controversial International Clearing House (ICH) under which all international incoming calls are terminated at central location in the name of curbing grey traffic and earning national exchequer.

It is grossly miscommunicated and misapprehended that call rates from international destinations to Pakistan increased because of some new or additional taxes, and that due to these taxes our national exchequer will get benefited every year.

Media, politicians and government authorities are calling it a “New Tax” on international incoming calls.

However, this is not the case.

International incoming call rates to Pakistan were increased due to increase in call rate and APC. All this money (due to increased call rates and APC) goes to LDI operators and hence terming it as an income for our national exchequer isn’t correct.

Pre ICH and Post ICH International Rates:

To explain this further to our readers, let’s have a look at pre-ICH and post-ICH rates for international callers:

Before ICHAfter ICH
AAR12.5 cents / minute17.6 cents / minute
ASR6.25 cents / minute8.8 cents / minute
LDI’s Share5.0 cents / minute5.9 cents / minute
APC1.25 cents / minute2.9 cents / minute

To better understand above table, let’s have a look at definitions for the terms used in it:

AAR or Approved Accounting Rate: The call rate that international caller has to pay. This is the rate that international caller will pay to distant operator (say to AT&T) per minute for making calls to Pakistan.

ASR or Approved Settlement Rate: This is the amount of money (usually half of AAR) that will go to local LDI operator for receiving calls in Pakistan.

Out of this money LDI operator may pay interconnect charges to local loop operator if call is terminated to other than LDI’s own network. (If you don’t know what a local loop is then keep reading, we will explain it below).

APC or Access Promotion Charges: ASR, as hinted in above paragraph, is then further divided into two parts. One is LDI’s share and second is APC. LDI’s share, as name suggests, will go to LDI operator. While in case of APC there can be two scenarios, i.e. local operator is either fixed line or cellular.

  • In case of fixed line, APC goes to local operator.
  • In case of cellular, APC goes to Universal Service Fund.

Please note that All these rates, that are AAR, ASR and APC are defined by PTA and can be changed with authority’s approval.

For you to completely understand the network chain, there can be three kinds of operators involved in originating and terminating an international call.

  • Distant operator
  • Local LDI operator
  • Local Loop operator

Distant Operator: As the name suggests, distant operator will be the foreign operator that is responsible for originating calls.

LDI Operators: Local LDI operator are responsible for receiving international incoming calls in Pakistan. There are total of 14 LDI operators in Pakistan which decided to suspend their international circuits to allow PTCL for receiving all international incoming calls. List of all LDI operators in Pakistan is available here.

Local Loop Operator: Local loop operators are allowed to use their communication circuits to transmit/receive calls with-in Pakistan and with-in defined regions. Nayatel, for example, is a Local Loop operator which operates its network in Islamabad/Rawalpindi. List of Local Loop operators in Pakistan is available here.

Now, when we have defined all terms and operators involved in terminating an international calls, here are possible scenarios for call routes:

  • Distant Operator-> Local LDI Operator-> Local Loop operator.
    • Example: AT&T –> Wateen Telecom –> Nayatel
  • Distant Operator –> Local LDI Operator –> Cellular Network
    • Example: AT&T –> Wateen Telecom –> Zong (Zong is not given an LDI license)
  • Distant Operator –> Local LDI Operator –> Same LDI Operator which has Local Loop License as well
    • Example: AT&T –> World Call –> World Call

In above given examples, it is clear that LDI operator, after receiving calls from distant operator, routes calls to local loop operator, if calls are not destined for its own network.

After implementation of ICH, as mentioned above, all LDI operators suspended their international circuits and whole country was relying on PTCL to receive international incoming traffic.

Now getting back to above given table.

ICH consortium was to get all the money (LDI’s share + APC), except that if calls were to be terminated on cellular networks. In such case APC was to be given to USF. Money going to USF is again not an add-on for our national exchequer. Money for USF is to be used for telecom development and can’t be used by the government.

All of the revenues, that this ICH consortium is destined to make, will go to LDI operators that are part of consortium with their respective pre-defined share (based on their pre-ICH market share).

As it is clear from our this discussion that there is no new tax, but increase in APC and ASR that does not go to national exchequer at all.

Again, all the money that will be generated through these increased call rates will go to LDI operator’s pocket. Who may or may not bring this money to Pakistan, since there are LDI operators who are foreign based.

Just in case if you don’t know, Lahore High Court has suspended the policy directive of MoIT for implementation of ICH and hence ICH is no more operational as of today. Court said that ICH will remain suspended till next hearing.

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