chapter 5 - Pakistan Telecommunication Authority

Long Distance
International
O
verview
affordable tariffs for large number of countries.
PTCL also reduced its tariffs at the end of 2006
The Long Distance and International (LDI)
and now international direct dialing facility is
segment has been evolved after the
available on every PTCL connection and call
deregulation of Pakistan telecom sector in
booking is no more required. Similarly
2004. Since then the LDI segment has
international dialing facility from mobile
undergone significant changes in terms of its
number has also revolutionized the LDI
structure, calling rates and increased choice to
segment.
telecom consumers. PTA awarded 14 licenses
for Long Distance and International services
The sector witnessed blooming health wherein
till 2007 to local companies. Out of these 14 LDI
telecom consumers enjoyed international
licensees only Multinet has not started its
dialing as low as Rs.2/- minute (to specific
services as yet, although the company has laid
countries). However, hyped up market and
its OFAN across the country. Rest of 13
stringent competition led to filtration and
companies are operational. LDI companies
companies who had been involved in price
including Wateen, Circlenet, Link Direct, and
discrimination/predatory pricing finally had
World Call have laid or in the process of laying
to suffer in terms of financial loss. Due to this
their own networks (OFAN). Wateen Telecom,
aggressive competition it is becoming
which has its network across the country, now
increasingly difficult for operators to sustain
claims to have largest WiMax network across
their financial health and growing pressures
the world. 3 out of 6 cellular operators have
from the market. Companies have started
also acquired LDI licenses and are now routing
looking for foreign investment to survive in the
their total mobile traffic through their own
market e.g. Worlcall has sold some of its shares
LDI's. The LDI operators are performing
to Oman telecom, also 30% shares of Burraq
aggressively in the local market by offering
have been acquired by Qatar Telecom. These
Pakistan Telecommunication Authority
62
Long Distance & International
changes in the market also show increasing inertest of UAE based telecom companies in the
telecom market of Pakistan.
The incumbent operator PTCL being the owner of essential facilities, that all LDI's required before
establishing their own network, had
been taking advantage of its position.
Figure - 31
Point of Presence (LDI)
Since the company is working both in
wholesale and retail market for LDI
services therefore it remained one of the
127
140
116
120
most threatening competitor to all LDI
operators with an edge to cross subsidize
100
and underselling all new LDI operators.
80
Similarly operator's dependence on
60
PTCL for facilities including internat-
40
ional circuits, the Digital Interface Units
20
and access networks is also eroding the
0
76
2004-05
LDI market. LDI operators are also
2005-06
2006-07
vulnerable to grey traffic menace, when
Authority in the process to look into technical solution of this menace. Grey traffic although gives
handsome profits to illegal operators but by bypassing national gateways it causes revenue loss to
the government and the LDI operators.
New established companies are establishing their networks across the country where new players
in this regard the companies have 127 total points of presence (PoP). Last year there were 116 PoPs
in all. Currently Woldcall, Callmate and Burraq have maximum PoPs in the local LDI market..
Optic Fiber Access Network
Today the LDI industry in Pakistan is
reshaping through enhanced use of
enabled optic fiber media for delivering
seamless high capacity services. The
domestic long distance capacity in
Pakistan has substantially increased with
three LDI operators laying OFAN across
the country including Multinet, Wateen,
and Link Direct. The optical fiber laid by
Malaysian based company Multinet, spans
over a total of 4100 Km distance with a 48
63
Pakistan Telecommunication Authority
Figure - 32
Geographical Coverage by Wateen
•
Wateen Long Haul Providing connectivity
Mardan
from Karachi to Peshawar.
Peshawar
•
Five Rings of 24 Core Fiber
•
Kohat
DWDM Deployment of 160 Lambda
Capable Equipment
Ahmedbanda
Nowshera
Abbotabad
•
Taxila
Mandi
Bahauddin
Khushab
71 Sites for Add/drop functionality
Bannu
Mianwali
Karak
D I Khan
Bhakkar
Quetta
Sialkot
Sargodha
Wagah
Gujranwala
Chiniot
Lahore
Jhang Faisalabad
Raiwind
Kasur
Gojra
Pattoki
T T Singh
Sahiwal
Okara
Pakpattan
Chichawatni
Layyah
Arifwala
Khanewal
Kot Addu
Qureshi Chowk
Mach
D G Khan
Burewala
Multan
Vehari
Muzaffargarh
Mailsi
Fazilpur
Sibbi
Lodhran
Rojhan
Khandkot
Dera Murad Jamali
Jacobabad
Bahawalpur
Liaquatpur
Rahim Yar Khan
Dharki
Shikarpur
Sukkur
Larkana
Amirabad
Dadu
Nawabshah
Kalri
Jamshoro
Nooriabad
Karachi
Thatta
Hyderabad
Islamabad
Gujar Khan
Jhelum
Kharian
Gujrat
Long Distance & International
Figure - 33
fiber DWDM and laid in a configNetwork Coverage by Multinet
uration of four self healing rings. This
configuration inherently improves
4,100 Km Optical Fiber Cable
Network:
redundancy of the installed system
48 fibers
Four Self-Healing Rings
with the advantage that each ring of
DWDM based system
the deployed system can be isolated
in the event of occurrence of fault or
any serious damage to laid fiber at a
point within the network. The
maintenance team can easily isolate
the damaged section for required
repair work without causing any
interruption of service. There is also
an SDH-10 G / IP-10 G ring layout
IP/MPLS enabled ports at various
Figure - 34
locations with nodal points. Link
Network Coverage by Link Direct
Direct another LDI operator, which is
a sister concern of Pakistan’s largest
Mobile operator Mobilink, has also
laid its own optic fiber access
network across the country in order
to cater for Mobile traffic requirements. The deployed network has
similar configuration to networks of
PTCL and Multinet in multi-ring
manner. In addition to the above
Wateen Telecom, a subsidiary of
Warid Pakistan has deployed an
extensive long haul network
providing connectivity from Karachi to Peshawar. There are five rings of 24-core fiber
with DWDM deployment of 160 lambda cable equipment at 7 sites with add/drop
functionality. It is expected that network laid by these three companies would give
comfort to the increasing telecom traffic and will help in reducing telecom prices overall.
Km
TA
41
11 9
50
K
m
Km
X IL
A
MARDAN
PESHAWAR
ISLAMABAD
93 K m
11
7
DWDM
RING NO
. 01 - A
K
m
L ac h i
112 K m
JHELUM
SIALKOT
5 8 Km
BANNU
72 K m
RA
GUJ
MANDI
BAHAUDDIN
71 K m
Shahbaz
Khel
m
75 K
SARGODHA
K
m
11 3 K m
FAISALABAD
64
Km
Km
5
DWDM RING
NO . 01 - B
87
AL A
A NW
G U JR
9
D . I. KHAN
T
70 K m
m
75 K
LAHORE
45 K m
1
2
1
K
m
Retra
115
OKARA
Km
RAIWIND
41 K m
Mian
Channu
1 14 K m
K m
81
SAHIWAL
K m
10 2
105 K m
MULTAN
K
m
D . G . KHAN
11
8
94 K m
.
O
K
m
N
03
GN
O.
RIN
DM
90 K m
Jamshoro
Nooriabad
NAWAB
SHAH
HYDERABAD
m
90 K
Km
109 K m
Morro
1 04 K
m
90
KARACHI
m
7 K
80 K m
Km
Kalari
11
SUKKUR
74 K m
Ranipur
93 K m
1 18
DW
100 K m
Km
Dherki
Km
DADU
1
05
G
IN
R
M
W
84
38
1 28 K m
99 K m
R .Y .KHAN
D
67 K m
LARKANA
Liaqatpur
D
Kandhkot
SHIKARPUR
80 K m
BAHAWALPUR
02
Fazilpur
90 K m
Rojhan
99 K m
Thatta
Pakistan Telecommunication Authority
64
Long Distance & International
LDI Financials
The LDI market is growing every year, as the companies are
establishing their own networks and reducing their dependence on
PTCL backbone. Similarly few LDI companies have sold their shares
Table - 18
Investment by LDI
Operators (2006-07)
to foreign investors. This has brought in more FDI in the country.
US$ Million
Worldcall has sold its 60% shares worth US$ 220 million to Omantel Burraq
and Burraq telecom has sold its 30% shares worth US$ 220
million to Qtel. Only last year total investment in the LDI sector
was around US$ 51 million, which grew to US$ 603 million in
2007. Main contributor to this huge investment was Multinet
and Link Direct as both companies have laid down their own
OFAN.
Dancom
telenor
Wateen
World Call
Link Direct
Wise Com
Multinet
Total
12
2
23
1
0
494
3
68
603
With increasing business and large shift in traffic patterns, the LDI operators' revenues
have also increased. The LDI operators cumulative revenues in 2006 was Rs. 13,235 million
which grew to Rs. 15,275 million, showing a growth of 15% in the year 2006-07. Although
profitability of the companies was already not very well in the last year but this year the
profitability has decreased further. The main factors contributing to lower turnover this
year may be low tariffs and increased cost of operations in highly competitive market
where present international incoming traffic is terminated (illegally) at lower than
decided rates by the regulator.
Figure -35
Revenues by New LDI Operators (2007)
5,000
Rs. Million
Total = 15,275
4,389
4,500
4,000
3,500
3,000
2,574
2,307
2,500
1,885
2,000
1,500
746
1,000
915
1,068
537
65
Wateen
Callmate
Link Direct
World Call
Wise Com
Burraq
Dancom
Pakistan Telecommunication Authority
telenor
227
DV com
192
294
Telecard
109
Redtone
32
4B gentle
0
circle net
500
Long Distance & International
Wateen's turnover this year was more than Rs 4,000 million, which is highest in the LDI
market followed by Callmate and Link Direct. Multinet did not generate any revenue
since the company has not started its commercial operation as yet.
LDI Tariffs
Financial year 2006-07 has witnessed
stability in terms of tariffs reduction.
National and international long
distance tariffs which were Rs. 42 and
Rs. 74 in 1995-96 have been drastically
reduced to Rs. 2.30 per minute. PTCL
is offering same national and
international long distance tariff of
Rs. 2.30 per minute.
Figure -36
PTCL Tariffs over the years 1996-2007
80
74.0
70
Nationwide
60
International
50
42.0
40
39.0
30
23.0
21.0
17.0
20
10.0
10
6.0
4.6
2.3*
2.3**
2.3
0
1995-96
2002-03
2003-04
2004-05
2005-06
2006-07
*Minimum
** Maximum
Same trend has also been witnessed in
calling card segment. In 2005-06, the
calling card operators were offering 150 long distance minutes which in Rupee terms
turned out to be Rs. 0.53 per minute whereas during this year, the minimum tariff of
calling card is Rs. 1.07 per minute. In addition, the calling card operators have also levied
daily deduction charges on their cards which range from Rs. 0.62 to Rs. 6.00 per day.
PTCL international tariffs dropped by about 90% in last 4 years while NWD tariffs
declined by 62% in the same period. Now analyst are of the view that regulator should
have some floor price make the business viable and to avoid consulted in the sector.
The calling cards tariffs of LDI operators, tariffs of PTCL, World Call, and Burraq have
remained quite consistent during last year. However, tariffs of Wisecom, Callmate and
Wateen have shown a considerable drop. Wisecom, Wateen and Callmate are offering
lowest tariffs of Rs. 1.07/m, Rs.1.58/m, and Rs.1.42/m on outgoing calls for specific
countries.
Table - 19
Calling Card Tariffs
Burraq
Combo
NWD Calls
Daily Deduction
Wisecom
GTO Batooni AKC
1.42
2.52
1.66
3.98
1.99
1.58
1.07
1.25
1.66
4.20
3.33
3.15
3.5
7.46
6.93
3.15
5.41
3.50
4.00
0
0
0
0
7.56
2.84
2.52
0.29
0
0
2.10 to 3.60
NWD Mobile
Wateen
PTCL
Callmate
World Call
WOL ARY VIVA
Telips Calling Cards
Hello
Pakistan Telecommunication Authority
66
Long Distance & International
Traffic Analysis
Since the end of PTCL's monopoly number of LDI operators have joined the market, the
traffic trends in the country have changed dramatically. The international traffic has
increased significantly as the tariffs have been dropped to the minimum due to large
variety of calling cards and ease of access from any PTCL number in addition to Local
Loop and mobile operators. Average duration of an incoming call has also been increased
to 6.2 minutes per call. Although the international traffic terminated on incumbents
network is still higher than the rest of LDI operator's traffic however, the incumbent is
loosing its international traffic share in favor of other LDI operators.
Incoming Traffic
Overall the international incoming traffic in the country has shown an increase of 54% in
2007 whereas this increase was 118% during 2006. PTCL had major share in the total
incoming traffic in the country with more than 2631.3 million minutes with total of 53%
market share in total incoming minutes. Rest of the LDI operators had almost 2,219 million
minutes of cumulative incoming traffic. Companies including Wateen, Burraq, callmate
had significant increase in their total incoming traffic. DVcom, Redtone and Worldcall
experienced negative growth in the year 2007.
Figure - 37
International Incoming Traffic Company
wise Share*
(2006)
Circlenet
4.8%
Wisecom
2.6%
(2007)
Circlenet
2%
Telenor
0.4%
Wisecom
3%
Dancom
2%
Wateen
5.0%
Dancom
1.7%
Callmate
6%
Telecard
0.3% Buraq
Telenor LDI
Link Direct
2%
1%
Wateen
10%
4B Gentel
0%
Callmate
9%
5.2%
DVCom
5.1%
Redtone
1.4%
Worlcall
7.1%
PTCL
55.3%
NTC
5.1%
PTCL
53%
Telecard
2%
*Estimates
Buraq
7%
DVCom
3%
Redtone
0%
Worlcall
6%
In 2004 and 2005 the international incoming traffic on fixed network was higher than that
of mobile networks, however with increase in mobile connections in the last two years
there has been a shift in the incoming traffic from fixed to mobile networks. Today more
than 57% of incoming international traffic comes on mobile networks where as only 43% is
terminated on fixed networks. Out of total 4,842 million international incoming minutes
67
Pakistan Telecommunication Authority
Long Distance & International
Figure - 38
International Incoming Traffic
(Fixed & Mobile) (2006-07)*
more than 2,700 million minutes were
on mobile networks and
approximately 2,095 million minutes
were terminated on fixed networks.
(Million Minutes)
(517%)
3,000
2,747
Fixed
Mobile
2,500
(43%)
Millionminutes
2,095
An analysis of the incoming traffic of
(51%)
2,000
1,608
(49%)
LDI operators from January 2007 to
1,500
1,545
(92%)
(89%)
1,180
June 2007 revealed that more than 70
860
1,000
%international traffic to Pakistan is
(41%)
500
(8%)
287
96
coming from USA, 10% from UK, 8%
0
from Saudi Arabia and 2% from each
2003-04
2004-05
2005-06
2006-07
*2007 traffic Estimates
UAE, Germany, Malaysia and Egypt
Only in 6 months there were around
124.2 million minutes terminated in Pakistan from USA. Similarly analyzing the city wise
data Karachi received maximum international calls followed by Islamabad, Lahore and
Gujarat. Since Karachi is the business capital of Pakistan therefore it is the main recipient
of international traffic.
Figure - 39
Top Ten Countries Originating Traffic
(New Major LDIs)
140
124.2
(Million Minutes)
120
Million minutes
100
80
60
40
17.3
13.6
20
3.5
2.9
2.8
2.8
1.3
1.1
0.7
0
UAE
Egypt
Germany
Malaysia
Aus
Norway
Japan
5,000,000
1,411,797
4,672,817
4,777,799
5,870,669
10,000,000
6,266,172
12,349,137
15,000,000
7,561,430
Figure - 40
Top Ten Cities by Traffic Termination
(New Major LDIs)
13,438,051
20,000,000
Saudi Arabia
15,307,207
25,000,000
UK
20,282,653
USA
Karachi
Islamabad
Lahore
Gujrat
Sialkot
Gujranwala
Jhelum
Faislaabad
Peshawar
Multan
Pakistan Telecommunication Authority
68
Long Distance & International
International Outgoing Traffic
Conclusion
Figure - 41
International Outgoing Traffic
1,271.1
1,400
1,200
Million Minutes
The international outgoing traffic in
Pakistan had remained low before
deregulation. With a number of new
operators and increasing competition the result is increase in
international outgoing traffic.
Decreasing tariffs have played major
role in increasing the international
outgoing tariff. In addition calling
card facility by number of operators
and very low tariffs for specific
countries have revolutionized
international calling in Pakistan. In
2006 the total reported outgoing
minutes from Pakistan were 405.1
million which grew to 1271 million in
2007, showing a humongous growth,
this number does not include
outgoing minutes via illegal sources.
Since a large portion of international
outgoing calls is unreported and
termed as gray traffic
1,000
800
405.1
600
400
200
148.3
96.1
0
2003-04
2004-05
2005-06
2006-07
Figure - 42
International Outgoing Traffic Share
by Cellular Operators (2007)
Warid
16%
Telenor
6%
Mobilink
50%
Paktel
2%
Ufone
25%
Instaphone
1%
With current scenario of decreasing
LDI tariffs, inaccessibility to essential facilities by SMP operator and gray traffic LDI
operators need to diversify their business in order to stay in the market. The increased
cutthroat competition in LDI market has pushed some companies into financial frenzy as
already witnessed foreign companies are showing interest in LDI business and are
injecting money, however the operators still need to diversify the business. Teleporting
and satellite facilities could be one source of income to the LDI operators if they sign
agreements with the international teleport operators. It will generate income for the LDI
business by facilitating the international traffic routed through Pakistan. Post-paid calling
is also popular in many of the developed countries. This service could also help the LDI
companies in getting permanent customers. Similarly international callback services
allow consumers to make calls from outside the country at long distance rates that are
69
Pakistan Telecommunication Authority
Long Distance & International
often much lower than rates charged in foreign countries. Such services are good for
businesses with offices outside the country, government agencies, banks, as well as
individual consumers who are traveling abroad.
Two other significant developments that are expected to benefit the LDI operators'
international incoming business relate to reduction in Access Promotion Contribution
and procurement of Traffic Monitoring System. It is expected that as a result of reduction
in APC and installation of Traffic Monitoring System the grey traffic would be further
curbed and result in increase revenue opportunities of LDIs.
Pakistan Telecommunication Authority
70