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If you think you have been treated unfairly by the functionaries working under the FBR, you can file your complaint with the Office of Federal Tax Ombudsman. Please visit FTO website www.fto.gov.pk or contact us through Tel: 051-9212316 Fax: 051-9205553 for further information on how we can help you.

What to expect after ICH is implemented

Pakistan fixed telecommunication market players are moving towards a rare unanimous move that will, in theory, bring in a lot of money for all of them. The move is the establishment of an International Clearing House, or ICH - as it is fondly called in the circles. A lot of time has gone into the technical debate, politics and money power that come along with such a solution but if the numerous flies on the wall are to be trusted, it appears that ICH will be a reality anytime now. 

The ICH is planned to be the only entitled network entity that will receive voice traffic from around the world headed towards Pakistan. The regime is planned to have an initial life time of 2 years. The termination rates for Pakistan, that currently are in the unauthorized sub-2c range due to intense price-war between telecommunication providers, will rise sharply and are expected to rise in the 8c range.

The set up, in plans, will allow Pakistani players to charge higher termination fee from international partners which will allow more money to flow to Pakistan, more money to find its way to the government by way of contribution funds and general taxation due to increased documentation of the traffic and more money to the network development infrastructure for the local operators. 

In a more practical world, things will typically fall out of plan and some or all of the following could happen. This could be either good or bad depending on which side of the ‘switch’ you are:

1. International players will, initially at least, have to pay up to 4 times more to send calls to Pakistan numbers. Pakistani expatriate population will see calling rates to Pakistan going up and some of them might change their calling trends and duration go down. 
2. The hunt for gray operators by the international players who would be hit by a 400% overnight rate hike will become crazy aggressive. 
3. Since ICH will be hosted by PTCL on behalf of all the players, it will use its own bandwidth for the traffic exchange with international players. As a consequence, Transworld will loose at least 3,000 MB of its current transit Internet traffic that it has sold to licensed LDI operators in Pakistan. These networks and this transit Internet capacity will be rendered useless because all traffic will go to ICH (hosted by PTCL). This will result in Transworld lowering down its business grade contention free transit Internet prices for the corporate and local market to ~$35 (Rs 3,200) per megabit. Expect retail Internet prices from Wimax and DSL providers to go down further initially due to Transworld rate reduction and subsequently due to the price war for the retail broadband market (both wired and wireless).
4. Invariably, the gray market will again rare its ugly head. The gray traffic market evades all kind of taxes and typically offer terrible quality to the other party on the remote end due to inferior infrastructure and the  shady nature of the business.
5. While it lasts, the money coming from higher international rates for calling Pakistan will find its way, after deductions of due levies, taxes and shares, to the local companies. This is where the situation gets interesting. The boards and owners of the telecommunication companies will have a tough choice to make - keep the windfall money and move it elsewhere or invest it in theiir networks which are not being used while ICH is alive and kicking. I expect 90% of the companies to fall for the former and only 10% of the lot to take a longer professional view and keep investing in their network for the rainy days when ICH falls down and self-owned networks would be needed remain relevant to the game.
6. International vendors businesses such as those of high end routers, voice switches, media gateways, session border controllers, billing software and other allied infrastructure will see a sharp decline. A few upgrade orders by PTCL would be there but the general dispersed sales for these international vendors will dwindle down while ICH is alive. LDIs have positive cash flows and they had been a big boost to international companies selling boxes and services in Pakistan.
7. A lot of employment will also be likely lost. Assuming a very conservative average of 20 staff members for each of the dozen players, some 240 people might be rendered jobless.

Nobody in the industry is very confident of the ICH remaining a long term arrangement given the ever-present leg pulling and lack of industry cooperation and the lack of best practices but at the same time, the money inflow, that ICH can bring in, have all of them drooling over it already.

Along with the upcoming 3G auction, the telecommunication landscape of Pakistan is beginning to appear interesting again. Let’s see how long it lasts.

Baby Baby

Baby Baby,
yes mama
R u EngineeR,
yes mama
any motivation
no mama
lots of tension
yes mama
family life
no mama
BP-sugar
yes mama
monthly income
ha ha ha.

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