Proposed Revision to CVAS Licensing Template

WISPAP.ORG, thoroughly reviewed the consultation paper regarding the proposed changes to the licensing clause for Data Class Value Added Services (CVAS) license as published on the PTA website.

First and foremost, we appreciate the efforts of the Pakistan Telecommunication Authority (PTA) in seeking feedback from stakeholders on this important matter. We understand the objectives outlined in the consultation paper, particularly the aim to address disparities in the current licensing framework and promote broadband proliferation in the country.

However, we have some concerns and suggestions regarding the proposed changes:

1. Purpose of the License: We are concerned that the proposed changes may not effectively serve the intended purpose of promoting internet proliferation, especially in deprived areas of Pakistan. Instead, it appears that the changes may primarily benefit existing Cable TV Operators who have already obtained licences from PEMRA. This could perpetuate the stagnation in the industry due to the monopoly and ill-practices (Badmashi) held by certain cable operators and regulatory challenges.
   
   

2. Infrastructure Deployment and Agreements with Local Loop Operators: The requirement for CVAS operators to enter agreements with local loop operators for infrastructure access creates a risk of monopolistic practices and undue pressure from these operators on CVAS operators. This can hinder the operation and development of networks properly. We recommend reassessing this requirement to ensure fair competition and encourage independent infrastructure development by CVAS operators.
   
   

3. Infrastructure Development: We strongly believe that all CVAS operators should have the autonomy to deploy their own fiber optic networks without being dependent on agreements with Local Loop Operators or Cable TV Network Operators. This will encourage innovation, competition, and investment in network infrastructure, ultimately benefiting consumers and driving broadband adoption.
   
   

4. Restriction on Cable TV Operators: We recommend that Cable TV Operators should be barred from providing internet services to prevent anti-competitive behavior, badmashi practices and foster a level playing field for both new entrants and existing internet service providers. Allowing Cable TV Operators to offer internet services could hinder market development and job creation.
   
   The current ill-practices employed by cable operators, such as the division of areas, and resorting to violence, including the use of goons, fighting, and intimidation tactics to secure customer connections, are deeply troubling. Such behaviour not only poses serious safety risks but also undermines the integrity of the industry. The proposed changes should include measures to address and eradicate these illegal and unethical practices.
   
   

5. Licence Area: We propose that the area of operations for licensees should be defined by government divisions (provincial divisions), such as Rawalpindi Division or Lahore Division, with an additional radius of 20 kilometres from division boundaries. This approach will ensure that businesses have a sufficiently large market to operate efficiently and effectively.
   
   

6. License Fee and Increase: While we agree with the proposed annual licence fee of 100,000 rupees, we believe that the proposed increase of 10 percent annually is excessive. We recommend limiting the annual increase to no more than 5 percent to mitigate financial burdens on licensees. Additionally, we suggest removing complimentary audit reports and user record updating (indicators) requirements to streamline administrative processes.
   
   

7. Medium of Service Provision: There should be no restrictions on the medium used to provide internet services to customers. Licensees should have the option to deploy either wireless/wired or both (fiber optics or Cat 6) networks based on their business requirements and market conditions.
   
   

8. We have some concerns and suggestions regarding clause 1.2.4 of the proposed license:
   

   • Clause 1.2.4: We strongly oppose the requirement for the Licensee to establish Service Level Agreements (SLAs) with Local Access Providers (LAP) and/or Infrastructure Licensees (IL) for access/IP bandwidth and last-mile connectivity. Imposing such mandatory agreements creates undue financial burdens and operational constraints on CVAS holders. Additionally, it fosters a monopolistic environment where access and infrastructure providers hold disproportionate power over CVAS operators. This could lead to unfair pricing practices, quality of service issues, and disputes that negatively impact consumers and the industry as a whole.

   • Furthermore, we have observed instances where access providers engage in blackmail tactics during these agreements, further exacerbating the challenges faced by CVAS holders. Therefore, we strongly recommend the removal of clause 1.2.4 from the licensing document.

   • Instead, we propose that CVAS holders should be allowed to deploy their own fiber networks within a limited area for customer services only. This approach would empower operators to efficiently serve their customers while promoting competition and innovation in the market.
     
     

9. For clause 1.2.5: We respectfully request the removal of clause 1.2.5 from the proposed license. We believe that this clause unnecessarily restricts the flexibility and adaptability of licensees to respond to future developments and technological advancements in the telecommunications industry.

   • By prohibiting the provision of any telecommunication service not explicitly authorized in the license, clause 1.2.5 may inadvertently hinder innovation and limit the potential for future upgrades and service enhancements. It is essential for regulatory frameworks to remain dynamic and responsive to changes in the market environment to foster continued growth and innovation.
     
     

10. For clause 1.2.6: We respectfully request the removal of clause 1.2.6 from the proposed licence. We believe that this clause could have severe negative consequences for both operators and their customers.

    • Requiring immediate disconnection of a Licensee's Telecommunication System from that of an Operator whose license has been suspended or terminated could disrupt essential services for hundreds, if not thousands, of internet customers. This disruption would not only impact economic activities but also educational and social endeavours that rely heavily on internet connectivity.

    • Instead of immediate disconnection, we propose that operators be given a reasonable timeframe to rectify any issues leading to the suspension or termination of their license. This approach would allow for continuity of services while ensuring that operators have the opportunity to address regulatory concerns in a timely manner.

    • In conclusion, we believe that the removal of clause 1.2.6 will support a more balanced and pragmatic approach to regulatory enforcement, safeguarding the interests of both operators and consumers.
      
      

11. For Clause 1.3.2: We propose an amendment to clause 1.3.2 to shift the responsibility of initiating the licence renewal process from the Licensee to the Authority. We believe that this adjustment would facilitate a more streamlined and efficient renewal process, particularly for small-scale operators who may not be actively monitoring license expiration dates.

    • Instead of requiring the Licensee to submit a written request for license renewal at least 30 months prior to the expiration of the initial term, we suggest that the Authority proactively notify Licensees of the upcoming license expiry and initiate the renewal process. This approach would ensure that operators are informed in a timely manner and have sufficient opportunity to complete the necessary renewal procedures.

    • Furthermore, we recommend removing the 30-month timeframe requirement altogether. Renewal should be initiated within a reasonable timeframe proximate to the expiration of the initial term, as determined by the Authority. This adjustment would alleviate unnecessary administrative burdens on operators and promote regulatory efficiency.

    • In conclusion, we believe that amending clause 1.3.2 as proposed will contribute to a more effective and user-friendly licensing framework, benefiting both operators and regulatory authorities.
      
      

12. Regarding clause 2.1.4, and 5.6 of the proposed license:

    • Clause 2.1.4 and 5.6: We suggest revising clause 2.1.4 and 5.6 to ensure that compliance inspections conducted by the Authority or its duly authorized officers are carried out in a transparent and accountable manner. While we acknowledge the need for regulatory oversight, we believe that the current wording of the clause may inadvertently facilitate unethical practices such as bribery and abuse of authority.

    • Instead of granting open-ended access to the Licensee's premises and telecommunication systems, we propose that the Authority request permission from the Licensee to conduct compliance inspections. This approach would promote transparency and respect the rights of the Licensee while still allowing the Authority to fulfil its regulatory obligations.

    • Furthermore, we recommend that the Authority provide adequate notice to the Licensee prior to conducting any inspections. This advance notice would enable the Licensee to prepare for the inspection and ensure that all necessary information and data are readily available for review.

    • In conclusion, we believe that amending clause 2.1.4 and 5.6 as proposed will foster a more balanced and cooperative regulatory relationship between the Authority and Licensees, ultimately benefiting the telecommunications industry as a whole.
      
      

13. Regarding clause 2.2.1 of the proposed license:

    • Clause 2.2.1: We support the inclusion of provisions to ensure timely commencement of services within the Licensed AREA. However, we suggest further strengthening this clause to enhance accountability and compliance among Licensees. If the Licensee fails to commence the provision of services in its Licensed District within 1 year of the issuance of the license, the license shall be automatically cancelled.

    • In the event of license cancellation due to non-commencement within the stipulated time frame, the Licensee shall be required to pay the license fee again and undergo all processes for re-issuance of the license.

    • Additionally, a fine equivalent to 50% of the annual license fee shall be imposed on Licensees who wish to continue operating after the 1-year deadline without commencing services.

    • Licensees who apply for commencement within the due time, even on the last date of the completion of the 1-year period, shall be considered compliant.

    • If the delay in commencement is caused by delays on the part of the Authority due to its busy schedule or other factors beyond the control of the Licensee, the Licensee shall not be held accountable for the delay.

    • These amendments will encourage timely commencement of services by Licensees while ensuring fairness and accountability in the licensing process. In conclusion, we believe that incorporating these provisions into clause 2.2.1 will strengthen the regulatory framework and promote the efficient deployment of telecommunications services.
      
      

14. Regarding clause 5.4.6 of the proposed license:

    • Clause 5.4.6: We express our concerns regarding the requirement for Licensees to establish arrangements for separate audited accounting for certain activities. We believe that this requirement imposes unnecessary burdens on Licensees, particularly in terms of financial resources and administrative overhead.

    • Given that Licensees are already subject to annual licensing fees and its not linked to annual income anymore, imposing additional auditing requirements may be seen as duplicative and overly burdensome. This could lead to increased operational costs and complexity for Licensees, particularly for smaller operators who may have limited resources.

    • Furthermore, the involvement of external auditors for separate audited accounting may lead to inflated auditing costs, further exacerbating the financial strain on Licensees.

    • Therefore, we propose reconsidering the necessity of clause 5.4.6 and exploring alternative mechanisms for effective monitoring of licence conditions that minimise administrative burdens on Licensees. This could include leveraging existing reporting mechanisms or adopting risk-based approaches to auditing that focus on areas of high regulatory concern.

    • In conclusion, we urge the Pakistan Telecommunication Authority (PTA) to carefully evaluate the implications of clause 5.4.6 and consider removing this approach to minimize undue burdens on Licensees.
      
      

15. Regarding clause 5.10 of the proposed license:

    • Clause 5.10: We propose modifying the process for the type approval of terminal equipment to enhance efficiency and transparency. Instead of requiring individual approval for each terminal equipment, we suggest that the Authority maintain and regularly update an approved terminal equipment list on its official website.

    • Under this proposed approach, Licensees would have access to a comprehensive list of approved terminal equipment along with detailed specifications and serial numbers issued by the Authority. This would streamline the procurement process for Licensees, eliminate delays associated with individual equipment approvals, and mitigate the risks of bribery and corruption.

    • Furthermore, we recommend that the Authority periodically review and update the approved terminal equipment list to ensure compliance with evolving standards and technological advancements.

    • In conclusion, we believe that adopting this proposed modification to clause 5.10 will promote transparency, efficiency, and integrity in the type approval process for terminal equipment, ultimately benefiting Licensees and consumers alike.
      
      

16. Regarding clause 6.4.3 of the proposed license:

    • Clause 6.4.3: We propose modifying the record maintenance requirements for billing records to reduce the administrative burden on Licensees. While we acknowledge the importance of maintaining accurate records for regulatory compliance purposes, we believe that the current requirement to retain billing records for a period of at least three years is excessive and unnecessary.

    • Instead, we suggest revising clause 6.4.3 to require Licensees to maintain billing records for a period of one year. This timeframe aligns with standard accounting practices and ensures compliance with regulatory requirements without imposing undue administrative and storage costs on Licensees.

    • Furthermore, we recommend that Licensees be allowed to maintain electronic copies/record of billing records, thereby reducing paper waste and streamlining record-keeping processes.

    • In conclusion, we believe that amending clause 6.4.3 as proposed will strike a balance between regulatory compliance and operational efficiency, ultimately benefiting Licensees and promoting a more sustainable business environment.
      
      

17. Regarding clause 11.1.1 of the proposed license:

    • Clause 11.1.1: We express our concerns regarding the indemnification clause that shields the Authority, its members, and employees from legal proceedings arising from actions taken in good faith. While we acknowledge the need for certain legal protections, we believe that this clause may create an imbalance of accountability and undermine the Authority's responsibility to uphold regulatory standards and protect the interests of stakeholders.

    • We propose revising clause 11.1.1 to establish a more equitable framework that holds the Authority accountable for its actions and decisions. While it is important to protect individuals acting in good faith, the Authority should be held liable for any harm or damages resulting from its actions or policies that are not conducted in accordance with the law or are deemed to be negligent.

    • Furthermore, we recommend incorporating mechanisms for oversight and accountability to ensure that the Authority operates transparently and responsibly in exercising its powers.

    • In conclusion, we urge the Pakistan Telecommunication Authority (PTA) to reconsider the scope of clause 11.1.1 and adopt measures that promote fairness, transparency, and accountability in its regulatory functions.

In conclusion, we urge the Pakistan Telecommunication Authority (PTA) to carefully consider our feedback and ensure that the proposed changes to the Data CVAS licensing clause promote fair competition, innovation, and the expansion of internet services across Pakistan.

Coverage in Media

• ProPakistani.pk | 11th March 2024 | PTA Unveils Reforms to Streamline Internet Licensing and Broadband Expansion

• ProPakistani.pk | 25th March 2024 | ISPs Express Concern Over Proposed Reforms of Data Class Value Added Services Licensing

• Business Recorder | 25th March 2024 | Data Class Value-Added Services: Proposed revision of licensing template opposed