Off-Net Calls Are About to Get Cheaper in Pakistan

The Pakistan Telecommunication Authority (PTA) has decided to decrease the mobile termination rate (MTR) in a stepwise manner to reduce call charges for all networks.

In the first step, the MTR has been reduced from Rs. 0.70 per minute to Rs. 0.50 per minute at the start of the new year and it will remain at this level till June 2022. According to the PTA document, from July 2022, the MTR will be reduced further to Rs. 0.40 per minute till June 2023. From July 2023 onwards, the MTR will be reduced to Rs. 0.30 per minute.

The International Telecommunication Union (ITU) has defined termination rate as the “price charged by an operator for forwarding calls from other network customers to their own customers.” Similarly, MTR is the “price that a Cellular Mobile Operator (CMO) charges to another mobile operator for terminating its off-net calls on its network”.

Generally, the end-users are not aware of wholesale termination charges which are settled among the operators. Higher termination charges can favor larger players as compared to smaller operators; hence, the role of the regulator is important to provide a level playing field by rationalizing the termination rates in the telecom sector. Furthermore, effective implementation of interconnection promotes competition in the telecom sector.

In November 2018, PTA reduced the MTR from Rs. 0.90 per minute to Rs. 0.80 per minute from January 2019 to December 2019, and to Rs. 0.70 per minute from January 2020 onwards. For further review, PTA issued a consultation paper on ‘Review of Mobile Termination Rate’ on July 2, 2021, providing international benchmarking analysis for the determination of MTR in Pakistan.

The paper noted that Pakistan’s current MTR of Rs. 0.70 per minute is still on a very high side compared to MTRs in the region and as per international best practices.

According to PTA, a regional comparison conducted in this case showed that Pakistan’s MTR is $0.41 per minute which is much higher than that in Bangladesh, India, Malaysia, and Sri Lanka, where the rate is $0.16, $0, $0.24, and $0.25, respectively. Furthermore, most countries are continuously decreasing their MTRs.

The international benchmarking analysis undertaken in the paper shows that MTR calculated for Pakistan is between Rs. 0.28 to Rs. 0.30 as per Purchasing Power Parity (PPP) adjustment and between Rs. 0.12 to Rs. 0.24 as per Average Revenue Per User (ARPU) adjustments. Therefore, PTA proposed that MTR be determined at Rs. 0.30 per minute.

All CMOs including SCO, as well as LL and LDI operators, were requested to submit their comments and feedback on issues highlighted in the paper. An authority hearing with all stakeholders was also held on September 20, 2021. After due process and considering operators’ comments, PTA decided to reduce the MTR and determined the stepwise decrease in MTR for Pakistan and AJ&K and GB for all types of calls (i.e. local, long-distance, and international incoming calls) terminated on mobile networks from other mobile networks or fixed networks.

  • Although MTR is not visible to the consumers directly, it does impact the consumer in terms of lower off-net pricing. When a customer of Operator X calls a customer of Operator Y, the operators settle among themselves for the ‘cost of transporting the call’. As MTR gets lower, the off-net rates have a chance to reduce.
    Besides, there are countries where MTR is Rs. 0 so the consumer is not affected whether calling an on-net customer or off-net customer.
    Number Portability has already removed that distinction from technical perspective.

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