The Pakistan Telecommunication Authority (PTA) has observed that Mobile Termination Rates (MTR) are higher in the country than the international benchmarking and can be revised down to Rs. 0.30 per minute from 1 October 2021 against the existing Rs. 0.70 per minute to benefit consumers.
Mobile Termination Rates (MTR) is the “price that a Cellular Mobile
Operator (CMO) charges to another mobile operator for terminating its off-net calls on
its network”. Generally, the consumers are not aware of wholesale termination charges
which are decided among the operators.
International Benchmarking is a commonly used method that provides a convenient and cost-effective way to determine MTRs in a mobile market. Reducing the MTR will assist to decrease each operator’s variable cost and provide incentives to customers, such as; lower rates, enable operators to deliver better off-net call rates, reduce on-line and off-net differential levels, and safeguard smaller operators’ interest.
Average benchmark MTRs have been calculated using mean and median of Purchasing Power Parity (PPP) adjusted MTRs and compared with the PPP-adjusted MTR of Pakistan. Resultantly, MTRs for Pakistan are calculated as Rs. 0.32 and Rs. 0.28 by mean and median benchmark respectively compared to Rs. 0.30 to Rs. 0.43.
Considering MTR in USD of regional countries, Pakistan’s MTR @ US cents 0.45 per
minute is much higher than those of Bangladesh, India, Malaysia, and Sri Lanka that turn
out to be US cents 0.16, 0, 0.24, and 0.28 respectively.
The PTA took a sample of 26 countries and calculated the average benchmark MTRs using the mean and median of the PPP-adjusted MTRs, and compared it with Pakistan’s PPP-adjusted MTR. It has also been noted that countries are continuously reducing their MTRs over time considering a reduction in cost related to interconnection and ensuring a level playing field and competition in mobile markets.
The international benchmarking analysis undertaken in the consultation paper shows that MTRcalculated for Pakistan is between Rs. 0.28 to Rs. 0.30 as per PPP adjustment and between Rs. 0.12 to Rs. 0.24 as per ARPU adjustments. This depicts that the current MTR of Rs.0.70/min in Pakistan is still much higher than the calculated MTR using benchmarking.
Based on the international benchmark, the final adjustment to the MTR was decided in 2018. A further review of the MTR is necessary. Therefore, it has reportedly been proposed that the MTR in Pakistan may be determined at Rs. 0.30 per minute with effect from 1st October 2021.
It is evident that reduction in MTR can deliver the following benefits:
Expected to reduce the variable cost of each operator allowing the benefit to
be passed onto the customers in form of reduced tariffs.
Expected to help operators to offer better off-net call rates, reduce the current
differentials of on-net and off-net rates, resultantly enhance competition and
promote product innovation.
Expected to protect the interests of smaller operators and prospective market
Helpful in achieving the GOP initiative of Digital Pakistan by empowering operators
to provide affordable ICT services for the accelerated digitization ecosystem.