ISLAMABAD (May 10 2008): Pakistan Telecommunication Authority (PTA) has announced 30 percent reduction in Mobile Termination Rates (MTR) from June 1, anticipating it would further bring down the cost of telecom services. The PTA in its recent determination has announced termination charges for fixed-line as well as cellular mobile operators after considering international benchmark and other factors.
A short determination by the PTA reduced MTR charges by 28 percent, from Rs 1.25 to Rs 0.90 for a period of two-and-half years, saying it is mainly because of rapid growth of mobile market. A statement on Friday by the PTA said that reduction in MTR is expected to reduce fixed to mobile tariffs as well as off-net tariffs for cellular mobile operators, thus providing more affordable telecom services to the public.
To this effect, hearings were conducted by the authority on February 26, and April 30 which ascertained that for fixed line telecom sector, the cost models showed higher interconnection charges for local termination. Whereas for long-distance termination the results turned out to be lower than the existing applicable rates. However, the overall average termination rates are estimated to increase by about 8 percent over a period of two years.
The changes in the fixed-line termination rates are mainly attributable to higher costs in maintaining and rolling out fixed-line access networks and reduction in traffic owing to shifting of traffic from traditional fixed-line networks to mobile networks. The PTA claimed that Pakistan will be the first country in South Asia to have determined the interconnection charges based on Long Run Incremental Costs (LRIC).
It said the authority had engaged a UK-based consultant to assist it in determining interconnection charges using Fully Allocated Cost (FAC) under historical costing, bottom-up LRIC and international benchmarking. Interconnection charges play an important role in promoting investment, competition and growth of the telecom sector in any country.
The cost based interconnection charges also help in improving economic and technical efficiency of telecom operators. Internationally, LRIC methodology is used in many developed countries such as USA, UK, Sweden, Malaysia, etc, and has been declared to be the most efficient costing methodology in determining interconnection charges.
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