In order to promote fair competition in the sector, it is essential that operators with Significant Market Power (SMP) status should be identified with respect to each relevant market in order to prohibit them from abusing their dominant positions through anti-competitive practices. The Pakistan Telecommunication Rules, 2000 have laid down the criteria for determination of SMP operators in the relevant markets. Rule 17 of these Rules states as follows:
"17.-(1) An operator shall be presumed to have significant market power when it has a share of more than twenty-five per cent of a particular telecommunication market. The relevant market for these purposes shall be based on sectoral revenues.
"(2) The Authority may, notwithstanding sub-rule (1), determine that an operator with a market share of less than twenty-five per cent of the relevant market has significant market power. It may also determine that an operator with a market share of more than twenty-five per cent of the relevant market does not have significant market power. In each case, the Authority shall take into account the operator's ability to influence market conditions, its turnover relative to the size of the relevant market, its control of the means of access to customers, its access to financial resources and its experience in providing telecommunication services and products in the relevant market."
The PTA considers it appropriate to review the existing and other possible relevant markets in consultation with all stakeholders and has sought opinion on the existing and new possible relevant markets along with the criteria to be used by PTA for determination of SMP operators in these markets.
The telecom market of Pakistan including AJK & GB can be divided into different relevant markets on the basis of (i) geographical area and (ii) products / services offered in that particular market segment. Geographic market may continue to be based on the area where an operator is authorized to operate under its respective license. Regarding product/service markets, the PTA has introduced new "IP Bandwidth Market" besides the markets determined in the Determination of 30th September 2016 and will assess as to whether these markets should be considered as relevant markets for the purpose of determining SMP operators.
Regarding the criteria used for determining SMP operators, the Rules have given the primary criteria i.e. share of more than twenty-five per cent (25%) of a particular telecommunications market in terms of revenues. The Rules have also provided other measures, on the basis of which PTA may determine that an operator with a market share of less than twenty-five per cent (25 percent) of the relevant market has significant market power, or the operator with a market share of more than twenty-five per cent (25 percent) of the relevant market does not have SMP status.
The PTA intends to use the criteria for the purpose of determining SMP operators. However, if the market share of any operator is close to the threshold value of 25 percent then PTA may consider other factors, as given in the Rules, for the determination of SMP operators. It is pertinent to highlight that Telecom Policy 2015 states that the telecommunication sector will be managed through the application of Competition Rules; however, PTA is of the view that till finalization of said Rules the market should be regulated in light of the criteria given in Pakistan Telecommunication Rules, 2000.
The PTA is of the view that for the purpose of comparability and objectivity, the reports from all operators should cover the same period and operators should send requisite data duly audited by their auditors for the separate periods of January 1, 2017 to December 31, 2017 and January 1, 2018 to December 31, 2018. However, as the year-end of all the operators is not the same, PTA understands that it might not be possible to send the audited information to PTA. In case it is not possible for an operator to send the audited information, in that case, the concerned operator is required to send interim report for the above mentioned period to PTA (with the undertaking for the correctness of the data sent) along with latest audited information (yearly/half yearly, as the case maybe). This will help PTA in considering the latest market conditions while determining the SMP operators.
Below is the list of product/service markets which shall be discussed as potential relevant markets for the purpose of declaring SMP operators along with the justification. Fixed Local Loop Telecommunications Market includes provision of access and call services to end-users (whether through PSTN or WLL) in the region for which the Local Loop licenses have been granted by PTA. Geographically, this product/service market can be further sub-divided into fourteen (14) Regions in Pakistan and three (3) Regions in AJK & GB.
The PTA vide its determination of 30th September 2016 declared PTCL and SCO as SMP operators in all telecom regions of Pakistan and AJK & GB respectively. The PTA is of the view that this market should continue to be identified as relevant market for the purpose of declaring SMP operators.
For the purpose of determining the total market size and the market share of a particular operator in Fixed Local Loop Telecommunication Market, only the revenues from the provisioning of licensed Local Loop (including WLL) telecommunications services to the subscribers shall be taken into account. Such revenues may include installation/shifting charges, line rental, call charges, etc. for the avoidance of doubt, interconnection revenues from call termination services shall not be included in the total revenue base.
The LDI Telecommunications Market includes provision of long distance and international call services on national basis to end-users. Geographically, this product/services market can be further sub-divided into two (2) markets; Pakistan and AJK & GB markets.
The PTA declared PTCL and SCO as SMP operators in LDI telecommunications market of Pakistan and AJK & GB respectively. With the entrance of new LDI operators in the market, the monopoly of incumbent(s) has ended. However, keeping in view the criteria for measuring the market size for determining SMP, it is expected that still more than 25 percent of market share belongs to already declared SMP operators. The PTA, therefore, intends to identify this market as relevant market for the purpose of declaring SMP operators.
For the purpose of determining the total market size and the market share of a particular operator in LDI Telecommunications Market, only the revenues from licensed LDI Telecommunications services shall be taken into account. Such revenues may include call charges for long distance and international outgoing calls, whether collected from the customers directly or from other operators (excluding call transit charges). Revenues generated from calling cards (if any) shall also be considered while assessing the market share. However, revenues from international incoming calls shall not be included in the total revenue base.
Mobile Cellular Telecommunications Market includes provision of wireless-based telecommunication services (other than WLL) on national basis. This product/service market can be further sub-divided into two (2) geographic markets; Pakistan and AJK & GB markets. The PTA in its determination dated 30th September 2016 declared PMCL and Telenor as SMP operators in Mobile Cellular Telecommunications Market of Pakistan and AJK & GB respectively. PTA intends to seek fresh data from all mobile operators of both Pakistan and AJK & GB to determine the latest position of market shares and declare SMP operator.
For the purpose of determining the total market size and the market share of a particular operator in Mobile Cellular Telecommunications Market, only the revenues from the licensed mobile telecommunication services to subscribers shall be taken into account. Such revenues may include connection charges, line rent, outgoing airtime, roaming charges, revenue from data services, etc.
Broadband services involve the provision of always-on internet connection. The broadband services are provided to end-users by means of various technologies like DSL, Cable, Fiber, Wireless etc. The PTA in its Determination dated 30th September 2016 declared PTCL as SMP operator in the retail broadband market. PTA intends to seek data on this relevant market to assess whether retail broadband market should be declared as relevant market for the purpose of determining SMP operators.
For the purpose of determining the total market size and the market share of a particular operator in Broadband Market, the monthly rental revenues from the licensed services to subscribers, bandwidth capacity charges etc. shall be taken into account. For clarification purpose, revenues from sales of consumer premises equipment and installation charges (if applicable) shall not be included in the total revenue base.