Cellular operators involved in cartelization
July 22, 2011
The cellular phone sector is one of the most competitive sectors in the country witnessing an unending price war among market players who are slashing call and SMS tariff one after another to attracting customers but sometimes a reverse phenomenon are seemed as these players act in a way of cartel to increase their service charges.
All five operators—Mobilink, Telenor, Ufone, Warid and Zong- have slapped 1 to 1.5 percent fix rate of services charges on millions of customers as operational, administration or maintenance fee.
The joint imposition of charges is simple example of cartelization of cellular sector, which left no choice for customers to avoid it in any way in the price-hike environment because a customer has to pay it at any cost using any cellular network among all five.
The nature of the charges is also compelling, as customers have to pay it in advance at the time of load of balance or recharge of airtime. Hence, a customer whether he buys Rs 1,000 airtime or Rs 100 balance, he needs to pay it along with high taxes and already services charges imposed by cellular operators.
In August 2009, the same anti-competitive practice was witnessed in the cellular sector when four out of five introduced 10 paisa on the balance inquiry request of the subscribers.
This concurrent levy of service charges has been taken seriously by concerned authority as anti-competitive practice and hold an investigation study to check possible cartelization in the sector.
The Competitive Commission of Pakistan (CCP) found cellular sector involved in cartelization and issued 24 show-cause notices to top brass officials of all four operators in this regard.
It is although no doubt that the calls and SMS packages have been falling down one by one by all these operators in the visible unending price war among market players, but it is also true that they rarely impose charges on their telephony services. And whenever they have slapped or increased charges, they have done it jointly and sometimes covertly leaving no option for millions of customers for the other choice, they said.
On October 1, 2008, all these companies also levied 5 percent services charges at a time on the balance re-charge through upload and scratch card. If a pre-paid customer recharge his/her balance, then it has to pay 5 percent service charges to its mobile operators on every move. Same condition applies to post-paid customers.
Since last year, three out of five operators had also hiked helpline call charges by 50 to 100 percent
Warid Tel increased its helpline call charges by 50 percent to Rs 1.50 min plus tax in May 2011 followed by Mobilink and Telenor, which spiked 100 percent of their helpline call charges in the past few months ago.
Mobilink and Telenor helpline call charges have been increased to Rs 2 per call in Nov 2010 and April 211 respectively. Mobilink charges have increased to Rs. 2.42 including taxes whereas Telenor has surged its helpline cost to Rs 2.79 including tax and IVR applied charges.
It seems that cellular phone companies are reducing call and SMS rates constantly but the fixed services rates on different account show that the most competitive sector adopts anti-competitive practice when they need to enhance their revenues.
Telecom analysts said that cellular phone companies are looking for phasing out all the free services given to customers in order to generate earnings in the stiff competitive market.
They said that the unending price-war among all cellular phone operators have dragged them in the red zone, therefore, they all are seeking to increase their revenues to beat the operation expenses in the country.
Though the rate of new service charges is minimal but the number of subscribers is overwhelmingly high varying from different income bracket.
The cellular subscribers in the country are on the rise, crossing 100 million benchmark to reach 107.8 million by April 2011-end as per statistics of Pakistan Telecommunication Authority (PTA).
The mobile phone users are already paying high taxes on the services including 10 percent withholding tax, 19.5 General Sales Tax (GST) on calls. MMS, GPRS and SMS their packages and bundles. Besides, they are also overburdened with 5 percent services charges by cellular operators and now they have to pay 1 to 1.5 percent additional services charges.
The concerned authority should take notice on anti-competitive practice of the cellular operators and impose heavy penalty to refrain them for forming cartelization in the future.