State of Telecom Industry in Pakistan

Please note the changes mentioned below, as posted on the Braintel website. All Braintel users, please test this beta release and share your feedback on the newly introduced “extra step” which is needed to complete the outgoing call. I am thankful that the service is functional and will monitor it over the next few days for issues, quality and performance.

We are please to inform you that the service has been fully functional now as of 8th Sep 2008 (2:40pm PKT Daylight ). To avoid misuse of our service by grey service provider, we have made a small amendment in the service. We are introducing Computer Assisted Dialing system (CAD) that will help us to overcome the misuse of our service.

In CAD system you have to dial your destination number just the way you used to dial before 4th August 2008; after dialing your destination number press # key and wait for few sec and then simply hang-up the line; your phone will ring back within 45sec and you’ll be hooked with your dialed number.

If the destination number is busy, conventionally you have to try again and again, in CAD system you don’t have to dial again and again but our CAD system will do the rest, just the way a private secretary or your company’s telephone operator make the call on your behalf.

CAD system is new and unique; you may experience some intermittent disconnections during its beta testing.

Tariq Mustafa has written an excellent post about how to fix the Internet Telephony In Pakistan. Tariq argues that Internet-based services should be defined as new class of services with clear rules and regulations - something which PTA has been unable (or unwilling?) to do. After Tariq wrote this piece, the Indian telecom regulator announced that VOIP will be allowed - that puts the issue in further perspective and highlights the importance of fixing this mess in Pakistan.

For those who do not know, Tariq has been involved with Internet and technology in Pakistan since early 90s. There are very few experts who can rival the combination of his knowledge of telecom industry in Pakistan and his leading role in sharing information via online communities. Tariq notes that:

The main issue here is the ability of the LL operator to replace the traditional copper for its end user or the expensive 1900 Mhz WLL frequencies for its end user with the ‘Internet cloud’. It is technically possible but the use of Internet for voice problem had its own fair share of cloudiness. At the center of this debate is the use of the word ‘long distance’ - whether it is to be taken physically or network-wise.

When last LDI/LL licenses were issued, the LL license itself was a cheap affair - though the spectrum (both for 1900 Mhz and 3.5 Ghz) was auctioned at high prices. At that time, a number of Internet savvy people - Brain included - took the LL license only banking on new VoIP technologies to come to their rescue later.

A few VoIP technology companies (a cross between operators and technology vendors if you will) had been constantly chasing the smaller LL operators (as described above) evangelizing the use of VoIP in local loop operations where the ‘affinity to local numbers’ is the actual ‘good sold’ and the profit comes in from volumes of such ‘numbers’ beings sold worldwide at fixed monthly rates (but not actually always being used).

These VoIP technology companies met some success during the past couple of years with a number of LL operators signing up them either as partners or just technology vendors. At that time, cellular industry was priming and people, operators and the regulator somehow had little time to attend to this possibly controversial issue.

Now that the market is nearing a tele-density of over 50% and market consolidation has started, these by-issues will get more attention (and probably get more debated).

PTA’s clarification on use of VoIP (available from PTA’s website and discussed on some related online forums) is of little help as it leaves room for guessing by the readers.

My personal position here is that given the non-deterministic nature of public Internet (specially when the bandwidth is not directly coming from a T1 operator) as a transport mechanism for real time traffic, such ‘Internet-glued’ LL services should be allowed - they will always be placed at number 2 in terms of voice quality and deterministic performance. Such services could be declared a new class of service with clear requirement of informing end consumers about emergency services not working on them as well as possible degraded voice performance due to third party packet networks that happen to lie between the end networks. Given a considerable population of expatriate Pakistanis around the world, these services stand a fairly good chance of catching on in popularity and can earn some part of the much needed forex for country by the local companies offering such services worldwide.

Users of the popular VOIP servcie, Braintel, are facing problems with outgoing calls. The message says: “All circuits are busy - please try your call later”. Users have experienced this since first week of August. Braintel officials have posted a note on their home page (see above). For more on this see this discussion.

This is one of the longest outage of service from Braintel. I mean, how long does it take to upgrade servers?Does anyone has some idea of when this will be resolved? Perhaps someone from Braintel can share their side of the story?

After a relative period of calm, PTA has launched a new campaign against illegal telephony. With the help of technology by Naurus, PTA busted an operation at Karachi. Full details are at this news release By PTA. See grey telephony and VOIP coverage from the past at TelecomPk.net and a recent discussion on this topic at TGP.

DIDX+Voip in Pakistan+Super Technologies=Rehan Allahwala

TM has written a success story explaining the above equation. I want to share an excerpt here.

Super Technologies started its journey from the (then) innovative idea of Internet faxing back in 1987, morphed into a VoIP service company with a Pakistani network, changed to a hosted VOIP platform and finally, the team hit the sweet spot (incidentally as a by-product) of becoming a marketplace for an unusual telecommunication resource that nobody had not spotted before in the same context. The company has a number of developers working OUT of Pakistan.

So what is DIDX and what do they do? DIDX is about selling and buying an unusual, untapped asset that a lot of telecos are sitting upon - the E.164 numbers they give out to ‘their’ subscribers who take one (or more) service from them.

One of the core forces behind DIDX is Rehan Ahmed Allahwala. Rehan works alongside his American mates who front the company worldwide in commercial and marketing domains. Rehan leads the team that works on new ideas …… Read more.

On a related note for job seekers, Super Technologies is hiring for full time staff and interns - see this post and check out their site to learn nore and apply.

With so many new voip companies it has become increasingly hard to keep track of their offerings and service quality. Since may voip providers introduce new twists, it makes it even more difficult to compare the services. To solve this problem, a number of sites have come up with comparison information. For example see this site which lists many services providers and their rates country by country. Click on the image above to see rates for Pakistan, subject to change of course. Last time I checked, this site advertised 3 cents per minute for calls to Pakistan.

Here’s an extract from a useful Information Week article which provides good summary and links to other comparison sites, like the one above:

• Numbers that ring where you are. Telephones have always tied together service and location: You got local rates and could receive calls when you were at home, but not when you were traveling. Services like GrandCentral and TalkPlus break that link, relaying calls made to local numbers across the country or around the world to whatever phone you want.
• Free calls . . . to the right people. Several new services are trying to win customers with free calling — even for international calls. Jajah, for example, lets you call other Jajah users free in seven countries (and hopes you’ll find the service, which lets you make VoIP calls on your regular phone without special hardware, so convenient you’ll spend enough on other calls to make them money).

Read more »

Continuing the discussion on VOIP in developing countries and in particular in Pakistan, this post looks at the issues with regulating VOIP and the Grey telephony market. Pakistan Telecommunication Authority (PTA) defines Grey telephony as: the use of illegal gateway exchanges to bypass legal PTCL gateways and terminate/originate international traffic, including through VoIP gateways, GSM gateways, WLL phones, mobile SIMs or other related equipment. This traffic may then be distributed onwards using WLL and mobile numbers. It is claimed that gery telephony costs losses of over Rs. 3 billion annually.

Of course the laws regarding unauthorized or illegal use of VOIP vary from country to country. Developed countries regulate the technology to protect consumers and to encourage competition. Developing countries view VOIP as a legal and revenue issue and try to exert control over it. Many times its the law which is vague and does not clearly specify clearly when VOIP is allowed and when its not legal.  Last year in Pakistan there was lot of hue and cry when a software company in Islamabad was harassed on suspicion of illegal VOIP activity - it proved to be a completely baseless allegation. See this article for a good roundup of the story and for the different scenarios of VOIP usage in Pakistan. This kind of blatant use of authority and regulatory uncertainty combined with lack of technical knowledge by the authorities is a major obstacle for VOIP adoption and hurts the business deeply. Operators deserve to have a clear and predictable regulatory framework that helps to guarantee returns on investment.  Please note that the picture above of a VOIP lab (courtsey Flickr) is just for illustration.

In the paper Future of voice and VOIP, referred to in my last post there is some interesting discussion which I’ve included below with my comments.

Grey markets can offer cheaper rates because of the high profit margins that may be charged by incumbents that enjoy a monopoly (such as PTCL which had a monopoly a few years ago). For example, a caller might have to pay the 100 Rs for an international call that costs the incumbent operator about 3 rupees. Against this background, and despite legal crackdowns in various countries, the grey market looks set to flourish in Africa. According to Russell Southwood of Balancing Act, in most African countries the grey markets can be substantial (accounting for between a quarter and a third of international call revenues), and this has exerted strong downward pressure on prices.

Here’s some more commentary from the report about Pakistan’s VOIP situation:

PTA has issued technology-neutral licenses. VoIP services may be offered by Long Distance & International (LDI) and Local Loop (LL) licensees. 11 companies in Pakistan offered VoIP in 2005. Some new operators are looking to deploy IP-based networks and PTA is working on the necessary arrangements to tackle issues of QoS, numbering plan, internet telephony and costing methodologies etc. ISPs are not allowed to offer VoIP.

ISPs are licensed as either Electronic Information Service (EIS) or Non-Voice Communication Network Service (NVCNS) providers, neither of which permits licensees to allow voice over their data circuits.

Read more »

I came across an interesting paper at the ITU site titled “The Future of Voice” - you can also get the paper here at State of Telecom in Pakistan. This paper is a good guide to VOIP technologies and how different countries are dealing with it. It also talks about the future growth of voice markets and the technology trends which accompany it. In my next post I’ll write about the mention of Pakistan’s case in this paper.

At a related ITU workshop on this topic on Rauno Granath, Nokia’s Director of New Growth Markets and Networks, predicted that the worldwide number of subscribers to mobile telephony will reach 4 billion by 2010, and about 80 per cent the growth will come from lower income, emerging markets.

How will the Evolution of business models evolve to reach low-income consumers? This huge rowth in worldwide mobile subscribers means new business models must be created to meet the needs of low-income subscribers in emerging markets. The illustration below is an interesting way to look at it.

Source: “Voice services in new growth markets,” presentation by Rauno Granath, Nokia.

The paper also has a good number of illustrations, tables and data.

Pakistani business community, bloggers and consumers have been asking for a sensible VOIP policy for a long time. Finally we see a glimmer of hope - PTA has published a consultancy paper on VOIP which invites comments by all. The 58-page - written by a consultant, Naseem A. Vohra - is a good summary of VOIP technology and VOIP situation in Pakistan. You can download the paper in pdf format from PTA site or from telecompk blog.

The paper addresses legal issues, policy issues and issues related to licensing and regulation of the service. Even though comments are inivited on this paper I doubt that anyone at PTA is eagerly waiting for the comments.  But even if the fate of our input is unclear this is no reason to not participate in the process. This may be the best time to provide your input and feedback to VOIP policy. I suggest that all bloggers aggregate their reader comments on this topic and send to PTA - perhaps on paper, just in case PTA has difficulty using the complex technologies of e-mail or Internet.

Here are a few excerpts from the paper. The idea is to give you the flavor of what points are raised and options presented. One has to go through the paper to make sense of some of the points below.

There are four options to deal with the situation.
1. Liberalized option – all forms of IP Telephony service are legal with minimal regulation.
2. Incremental option – some forms of IP Telephony service are legal with significant conditions placed upon IP Telephony entrants.
3. Consultation (largely “wait and see”) – a public consultation is underway to seek opinions before definitive rules on IP Telephony are issued;
4. Prohibition – IP Telephony is illegal except for use in the core network i.e. long distance and international networks which almost all LDI operators have deployed but it does not touch the customer.

Comments are invited on
i) Conclusion that option3 and option 4 are not viable anymore
ii) Conclusion that VoB will catalyze the growth of Broadband.

Comments are invited on
i) Conclusion that telecom sector in Pakistan has already started migration from circuit switching to packet switching
ii) Conclusion that the boundary between VOIP and gray traffic is not clearly defined
iii) Conclusion that regulation of IP Telephony will not push the prices further down

Comments are invited on
i) Conclusion that Incremental Approach is the right way to go.
ii) Proposal that IP Telephony offerings are placed under three categories
iii) Proposal that category 2 offerings are split into two types i.e. “IP IN” and “IP OUT”.
iv) Proposed recommendations for IP Telephony authorization.
v) Proposed amendment in Broadband/Internet Licenses

This post examines the challenges faced by PTCL and its future prospects.  As we know the Etisalat owned PTCL has been engaged in battles with new competitors and regulatory body (PTA) on one hand and faces internal organizational issues on the other. Its profits have been sliding. Notwithstanding the grand claims by its executives, Will PTCL be able to reverse the trend and prove to be a good investment?

Background
In the last couple of years the impact of deregulation and increase in competition in telecommunication industry in Pakistan has been increasingly felt by PTCL. This phenomenon is not unique to PTCL - incumbent providers all over the world have gone through this difficult transition from being a monopoly to a free market competitor.

Let’s take a look at 2006 financial results of PTCL (As of Sep 30, 2006). The following is based on the information posted on PTCL web site and as reported on Business Recorder.

- During the period under review, PTCL added net 108,000 new working connections to its network. Overall, PTCL’s sales revenue for the first quarter was Rs.16.9 billion as compared to Rs.17.7 billion during the corresponding period of last year.
-The company announced net profit of Rs 8.4 billion translating into an EPS of Rs 1.64 for the first half of 2007, a decline of 23 percent over the corresponding period’’s net earnings and EPS of Rs 10.8 billion and Rs 2.12 respectively. The major factor for the decline in the top line was six percent downfall in the revenues from Rs 34.9 billion in first half of 2006 to Rs 32.7 billion in IH/FY07 owing to rapidly declining market tariffs
- Slide in profit is a continuing trend … question is when would it be stable? Investors do not welcome this uncertainty.

Threats and Weaknesses
* Increased competition in long distance continues to exert pressure.
* VOIP use is increasing despite ambiguous and discriminatory policies - this will eat into its profits (example: international outgoing calls). Note that PTCL itself is also utilizing VOIP technology (from iBasis) and as a result it has reduced its international rates drastically in 2007. Rs 2/min call to US is cheaper than Rs 2.5/min call to mobile phone.
* Bandwidth rate dispute with PTA is been dragged in court: if PTCL loses it will be a major cost, EVEN IF PTCL wins the case their artificially high bandwidth rates cannot be sustained.
* Paknet, the Internet service provider arm of PTCL continues to incur losses due to poor managment and lack of network optimization.
* PTCL-V, the fixed wireless phone service is poor.  They should use some their marketing Rupees and use it for better service delivery, correct billing and competent customer service.
* Recent censoring fiasco  and its poor handling exposed deep problems with administration and bureaucracy at PTCL. It was yet another major public relations disaster.

Strengths and Opportunities
o Made large capital expenses on network improvement to stay competitive.
o Ufone is performing well though Warid and Telenor are tough competitors. PTCL, Ufone’’s profitability increased by 49.2 percent to Rs 977 million in 1H/FY07 as compared to Rs 655 million in the corresponding period last.
o IPTV rollout can change the game, if done right it will tilt the odds in PTCL’s favor. It will make sticky bundles possible (tv+pohne+mobile) with say a single bill for convenience.
o With over 2 million lines PTCL is the largest WLL provider. 1134 base stations cover 720 cities and capacity is being added.
o Local service revenue is ok, paying bills through phone is a commendable start.
0 Has vast infrastructure and real estate assets which can be leveraged further.
0 Global connectivity reliability has been improved. PTCL is expanding the long distance and infrastructure side through spreading out two SEA-ME-WE submarine cables.

Conclusion & Recommendations

Report from The Nation.  A latest study conducted by Nokia pointed out that the people in Pakistan prefer style more than the need of being connected. The study says that the new devices combined with a attractive fold design with quick cover keys is bringing out substance to style, which is more acceptable in Pakistan as compared to other markets in the region of Asia and Asia Pacific. The study said that for innovation-conscious users ‘we need to offer intelligent and entertaining multimedia functionality in an easy to use, ultra slim package’.

Talking to The Nation regarding the study and cell phone users preference for Nokia in Pakistan, Tomi Paatsila, Vice President of Mobile Phones Sales and Market Operations for Nokia in the Middle East and Africa said that the users in Pakistan had surpassed others in the demand for innovation in technology.

He said that the cell phone users in Pakistan were involved more in style, which was beyond their expectations. He said the users in Pakistan needed style and design more than other features.

He said that Nokia was considering of doubling its investment in Pakistan looking at the response. He said that Nokia has conducted a comprehensive and detailed study of mobile phone users and Pakistani users have surpassed their forecast in the market which will be over 3 billion subscribers by 2008.

Tomi said that youngsters demanded innovation in multimedia computer that brings the complete experience to a sleeker body. He said that Nokia has created a very eye-catching device using premium materials to enclose world-class features and experiences.

Read more »

I have written about VOIP and voice over internet services here and here. These voip services are changing the way expatriate Pakistanis communicate with Pakistan. These voip services are one of the factors which will cause Pakistani phone numbers to change from 7-digits to 8-digits (see my post about this). At the same time the rates of international calls have dropped dramatically in Pakistan because of increased competition in long distance arena.

However there is nothing like dialing a local number and reaching your friend or family anywhere in the world. This is becoming quite common with many VOIP companies providing this service. You are given a Pakistan phone number and that number is pointed to your phone number abroad. So far so good. But one has to be careful before signing up for such services. Often the companies providing these services are new and share little information about their background. Sometimes they packup and close shop leaving users without service and the pain of a non-working number. For these reasons it is better to choose established and reputable companies which can provide better service. I am often asked about these services so I keep an eye on what’s out there. Usually for $30-40 you can find a service with unlimited incoming calls and perhaps a few hundred minutes of outgoing calls.

As part of my research, I have been testing the call forwarding service from Vonics. I was provided with a Lahore phone number and that number rings on my home phone in US. The service is about $30 per month - more info here . The voice quality is superb and customer service is prompt. The interesting thing about Vonics is that they provide phone numbers in 37 countries and (depending on the plan you choose) they also compete with top-notch players such as Vonage and Packet8 by allowing unlimited calls within US/Canada. Vonics told me that more plans will be introduced very soon.

I believe that this will become a popular and common service and many other players will jump in. The price will likely fall from $30s to $20s.

Have you tried any such service? Please share your experience with others.