Wednesday, December 31, 2003

Reviewing 2003 – Local Telecom Sector in Perspective



The most important development of 2003 in the local telecommunication and information technology sector has been the announcement of the much-awaited Telecom Deregulation Policy in July 2003. Opening of the telecom sectors to competition has been a powerful tool for the governments around the world who leverage it to bring about rapid sector development and associated societal changes. The same was being expected by the deregulation of the telecom sector in Pakistan as well. However, when the Telecom Deregulation Policy was announced in July, it was aptly termed as the continuation of the previous state monopolistic policy. Putting an artificial bar on the most attractive dimension of international incoming calls revenue and effectively directing it to the incumbent operator (PTCL), the policy makes the investment unattractive to the International players. Similarly, by asking for unrealistically huge financial guarantees, the policy ensures that participation of local business entities for local loop operations is effectively denied. The Government has indicated that the deregulation policy could be revised to correct some of the problems with the policy but any solid step in this direction is yet to be seen.

Pakistan Telecom Authority has announced that it intends to award two more fifteen-year technology independent mobile telephony licenses as part of its efforts to liberalize the mobile communication sector. This will increase the number of mobile phone operators in the country from four to six. As of September 2003, the number of mobile telephone users stands at around 2.8 million of which 1.6 million were added in 2003. Introduction of new operators will help promote the competition within the service sector that will hopefully sustain the explosive growth, increase the quality of the service and lower the cost for the end user.

While the ISP industry itself recorded numerous business closures due to severe competition, Internet access in general got better for the end user both in terms of quality and price. DSL and Cable Internet access finally were launched for the general public although coverage is extremely limited and prices are still very high.

On the DSL front, important developments have taken place during 2003. Instruction to PTCL for making DSL available to the public as an Internet access mechanism by the former Minister of Science & Technology, Dr Ata-ur-Rahman were never executed at the desired pace. However, increased awareness and popular demand forced the state-owned PTCL to work towards DSL solutions even if only in the cosmetic sense. Initially, only four parties were selected by PTCL as its franchise partners for offering DSL services and the doors of DSL were closed to any fifth party. Two of these parties selected by PTCL did not have any earlier background of providing Internet services. The limited number of franchise partners and incompetence and lack of seriousness of the ‘chosen few’ PTCL DSL partners manifested itself in a dead-slow DSL provisioning undermining the basic objective of the Government.

Existing ISPs who were denied any kind of role in the entire DSL game felt genuinely disadvantaged and ill-treated and approached PTA, the sector regulator which took the bold decision that allowed all ISPs to be able to provide DSL services in collaboration with PTCL. The positive development, however, has a few bottlenecks that will hinder the quick spread of DSL across the country as an Internet access mechanism. These include issues of inappropriate bandwidth backhauling facilities and cumbersome and, at times, undefined procedures of accessing the copper local loop on which the DSL network depends.

Over 5,000 ISDN BRI connections have been offered by PTCL in the last quarter of the year 2003 in Karachi alone. These ISDN connections are being accompanied by modern access devices that are being provided without any extra cost as part of the rental agreement. Most of these new ISDN BRI connections have been made possible by the placement of Chinese Switches as part of the PTCL expansion program. The business and the general public have reciprocated the offering by availing the connections quickly. The entire episode is a strong proof that modern services when offered in a cost-effective package sell like hot cakes.
Current global politics and the abuse-prone state of information technology have driven the security concerns of all the governments to an all time high scale. Given its place in the current global situation, cyber-security has been a big issue for the Government of Pakistan. Pakistan’s Interior Ministry launched a special wing to combat cyber crimes in part because the country had to rely on U.S. investigators to trace e-mails that are involved in terrorist and other anti-state activities. Effective legislature such as the proposed Electronic Crime Act 2003 and law-enforcement tools such as National Response Center for Cyber Crimes will be of considerable help. The special wing has been established at the headquarters of an intelligence agency in Islamabad. The purpose of establishing the NR3C, as stated by the government is to stop misuse of the Internet and trace those involved in cyber-related crimes.
Industry insiders, however, were quick to point out that certain basic elements are missing on the national front such practical and uniform security guidelines that should be enforced by the government and implemented by all the ISPs and other field players.

The Information Technology Law Forum (ITLF) of the Technology Resource Mobilization Unit (TreMU) has prepared a draft law called Electronic Crimes Act 2003 that can, if adopted, form the first of its kind legislation in the country. Aimed at giving cyber-crimes their due weight in the legal system, the Act tries to define the elements of electronic crimes.

Owing to its single-point-of-failure infrastructure, Internet traffic in Pakistan was disrupted several times in early 2003 due to repeated Denial of Service attacks that were launched against Government of Pakistan’s websites allegedly by Indian hackers. A cut in the local fiber cable in April 2003 brought the entire national Internet network to a complete halt. One big outage that was actually due to a cable fault inside Pakistan was wrongfully attributed to DoS attack and it was only after tens of hours that the cause was correctly ascertained. However, the good part of the DoS attack ordeal was some positive infrastructure changes that were made by PTCL to stabilize the Internet connectivity of PIE as well as the eventual signing off of the long-awaited Service Level Agreement between PTCL and Internet Service Providers.

The SMW-3 submarine cable network that connects Pakistan to the international voice and data networks faced one of the biggest planned outage in recent times. One of the sections of the SMW-3 network that had developed fault was repaired in October 2003. During the repair operation that lasted for fifteen days, the network faced partial as well as complete outages. Since 95% of the Internet traffic of Pakistan is routed through this network, it was a major concern for the community. The planned outage was already known and PTCL made alternate arrangement to divert the load of SMW-3 to satellite circuits. Given the track record of PTCL in terms of handling Internet related outages, the industry was doubtful of a safe alternate arrangement but PTCL did manage to handle the situation in a decent fashion.

In December 2003, PTCL has finally heeded to the long-standing demand of providing peering bandwidth between Internet Service Providers via its Pakistan Internet Exchange (PIE) network. Despite the fact that 95% of the ISPs are connected to the PTCL owned PIE network, the only bandwidth that PTCL sold off its PIE network was Internet transit bandwidth. This essentially drove the cost benefits of local peering from the ISPs towards PTCL. However, with low cost (2 MB for Rs 35,000 per month) peering bandwidth now available from the PIE network, ISPs can now reduce their bills to some extent. Local peering can also kick start the long-awaited local content hosting.