ICH under fire as US regulator opposes LDI higher rates in Pakistan

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LAHORE - SALMAN ABDUHU - In an order issued by Federal Communications Commission (FCC), the international communications regulator in the US, it has raised concerns on the higher termination rates being charged by the LDI operators in Pakistan post ICH. The order has been issued by the FCC in response to a petition filed by a US based provider of international communication services Vontage Holdings Corp, market sources said. In their order FCC has said that the new $0.088 per minute rate (Post ICH rate) is significantly above the previous level of approximately $0.02 per minute (Pre ICH rate) in October 2012. Since the increase is not cost-based they have deemed this practice as anti-competitive and have prohibited US telecommunication providers from paying above the Pre ICH rates (US$0.02 per minute) for calls to Pakistan.

As per figures mentioned in the Memorandum Opinion & Order issued on March 5th, 2013 by the Federal Communications Commission, Washington, D.C. USA with respect to a petition lodged by a US LDI operator, the inbound LDI traffic from the US constituted an estimated 2.9pc or 261m minutes during 2012 (2011: 1.7pc or 261m minutes at actual) of the total inbound LDI traffic/ minutes to Pakistan from the world. On the other hand, the rates being charged before the ICH arrangement stood around 2 cents/ min against the current 8.8 cents/min.

Even though a backlash on higher call rates has resulted from the United States, call rates from the Middle East (where most of the expatriates reside, around 40pc-45pc) are least expected to be deterred. This is due to the fact that parent companies of most of the domestic telecom operators originate from the ME region i.e. Etisalat of UAE (PTCL), Abu Dhabi Group (WTCL) and OmanTel of Oman (WTL). Therefore, a domino effect of the same stands least probable.

As per industry sources, LDI operators are still adamant that termination rates on international incoming will stay at the Post ICH level. Moreover, they have also said incoming minutes from the US constitute approximately less than 10pc of the total international incoming calls Ė 50pc of incoming from US is pre paid (As per FCC incoming minutes from the US to Pakistan totaled more than 240m minutes in 2011) hence itís not a significant enough share to warrant a change in industry rates. As per discussion with telecom operators the bulk of international incoming minutes to Pakistan are from the GCC countries.

Telecom industry expert Furqan Ayub believes the current circumstances make the outlook on international incoming rates somewhat unclear. Key risk is that the FCC decision may lead to other countries following suit and applying pressure for a broad-based reduction in rates.

Experts from AHL observed that this order directs from an earlier petition filed by Vonage Holdings Corp (a provider of intíl communications services from the US using third party US and intíl carriers to terminate its traffic overseas) filed on 3rd Octí 2012. Vonage argued that Pakistani LDI operators formed an ICH arrangement to create a monopoly situation with a 400% increase in termination rates (adversely impacting number of outgoing calls to Pakistan) had resulted encouraging anti-competitive environment.

It is now to be seen if the local LDI operators agreed to the Pre-ICH level call rates from the United States, or to the average US call termination rates of around 4.1 cents/min in terminating traffic from there even with FCCís orders. As far as local LDI operators are concerned, outbound calls are also expected to have increased because of the higher incoming call rates, which should provide local LDI operators a leverage to deal with any such reactions from intíl LDI operators i.e. holding back payments etc., set aside any bilateral agreements between local and foreign LDI operators on telecom services enforcing necessary actions by and for the parties involved.

Courtesy: The Nation


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