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Last date for license renewal: Fate of mobile phone operators, users hang in balance

In the face of expiry, mobile connectivity of millions of users in Pakistan is at risk. Jazz and Telenor have asked the government to renew their license at the same dollar price - $291 million - at which the license was acquired back in 2004. However, the federal government has approved the renewal policy of two telecom operators at $450 million each for 15 years. In the face of expiry, the companies have sought the court’s help as the continuity of their business is in jeopardy.

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News Desk |

The fate of the country’s largest mobile operators – Jazz and Telenor – is hanging in balance as the government has delayed license renewal for so long that the licenses of the two companies are set to expire on May 24 (today) without any renewal after they hit their 15-year life.

In the face of expiry, mobile connectivity of millions of users in Pakistan is at risk and the mobile communications industry body – GSMA – has warned that the high fees proposed for renewing the licenses would slow the development of the country’s digital economy. In addition, the head of Spectrum at GSMA Brett Tarnutzer has said in a statement that higher fee would affect operators’ ability to invest in and support affordable services.

The head of Spectrum at GSMA Brett Tarnutzer has said in a statement that higher fee would affect operators’ ability to invest in and support affordable services.

“It’s consumers that will lose out from imposing unfair conditions that put operators’ businesses in jeopardy,” Tarnutzer said. “We’ve already seen the damaging consequences that high spectrum prices have on coverage and quality of service in other countries. It’s important that Pakistan doesn’t repeat these mistakes, and place gaining inflated revenues from spectrum licenses above the connectivity of its citizens,” he said.

In a letter to the Pakistan Telecommunication Authority (PTA) and Frequency Allocation Board, the GSMA has called for reconsideration of higher spectrum fees. “We are committed to engage in an open dialogue to help the government achieve its policy objectives and facilitate sustainable investment in Pakistan’s digital future by all mobile operators,” it said.

Read more: PTA set to block all unregistered mobile phones by October 20th

161 Million Phone Subscriber Generate $17 billion Economic Impact

According to media reports, the number of mobile phone subscribers has surpassed 161 million. PTA data shows that the number of 3G/4G subscribers has crossed 67 million. It has been reported that mobile technology has become the primary means of communication for millions of Pakistanis, and enables the delivery of education, healthcare, and financial services.

In a letter to the PTA and Frequency Allocation Board, the GSMA has called for reconsideration of higher spectrum fees.

GSMA Intelligence research has estimated the total economic impact of mobile on Pakistan’s GDP at $17 billion, which is equivalent to 5.4 percent of GDP. The trade body has demanded to extend the deadline for agreeing on license terms for all mobile network operators on a three-month rolling basis at no cost “until it can reach a decision with operators”.

The body has also expressed concern over taxation on mobile technology. “Spectrum prices and taxes should be set at a sufficiently low level that allows operators to deliver affordable services and deploy mobile broadband widely,” Tarnutzer said.

“The high fees work against government efforts to bridge the digital divide and build the digital economy.” An English daily reported that the total direct tax and fee payments by the mobile sector were estimated at $950 million in 2017 alone.

Read more: No mobile phones during office hours, NAB chairman directs the officers

Legal Battle

Because of the uncertainty, both the companies had approached the Islamabad High Court (IHC) asking for “clarity” on the terms of the license renewal that it says should be done “in an equitable, fair and transparent way.” While granting a stay, the IHC had barred the Pakistan Telecommunication Authority (PTA) to not take any action against the companies and directed PTA to submit a detailed reply.

PTA data shows that the number of 3G/4G subscribers has crossed 67 million. It has been reported that mobile technology has become the primary means of communication for millions of Pakistanis.

The mobile phone companies had petitioned IHC against PTA over delay in the license renewal policy by the government only weeks before the expiration of the license. Facing expiry, the companies had sought IHC’s help as the continuity of their business was in jeopardy.

Since the process of renewal has taken so long – roughly over two years – the companies have requested the court that the “government should be stopped from taking any adverse action that limits the ability of the operators to carry on their business”.

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Dispute over Renewal of License

The companies have asked the government to renew the license at the same dollar price – $291 million – at which the license was acquired back in 2004. However, after a delay of several months, the federal government has approved the renewal policy of two telecom operators at $450 million each for 15 years.

The mobile phone companies had petitioned IHC against PTA over delay in the license renewal policy by the government only weeks before the expiration of the license.

Meanwhile, the third operator – Zong, whose license is due to expire in October 2019 – would have to pay $470 million to renew its telecom license. The court order prompted the government to proceed with the renewal request in the cabinet meeting on May 7 wherein it was decided that the license should be renewed at $450 million in the light of the spectrum auctions held in recent years.

Read more: State suffers Rs90 bn before SC restores taxes on mobile phone…

However, both the companies have maintained that as per the telecom policy and relevant clauses in the license itself the first renewal should take place at the same price that the license was originally acquired at – $291 million.

The issue of renewal of licenses of the telecom giants has been in process for a long time because the government was continuously delaying the approval until the high court granted stay in the case with directions to PTA to submit a detailed reply.