Regulating Business In The Telecom Sector


Regulating Business In The Telecom Sector

The telecom indicators showing the health of telecom sector in Pakistan are very impressive. As per the data exhibited on the website of the Pakistan Telecommunication Authority (PTA), the teledensity in Pakistan has increased from 4.31% (2002-2003) to 70.81% (2015-16). The share of the telecom sector in the economy is evincing a progressive trend: its contribution to the national exchequer was 38.40 billion rupees (2003-04), which has reached the level of 159.65 billion rupees (2015-16). With the growing size of the telecom industry, the interest in its governance through regulation has also increased. Interest from the point of view of the government agencies/institutions has culminated into turf-battles where the Competition Commission of Pakistan (CCP) and PTA are vying to regulate the business competition of the telecom sector.

Unfortunately, while the turf-battles are on between the two institutions, the informative and relatively objective input from the academia, especially from the business, commerce and information technology schools, has not been forthcoming resulting in an underdeveloped policy framework on the subject. It was direly felt recently when the CCP, a statutory body, established under a federal law, issued a Policy Note about regulating business in the telecom sector. It opined that PTA, the main regulatory body in the telecom sector, had the exclusive domain to regulate competition in the telecom sector in Pakistan.

The Policy Note makes quite a reading and raises more questions than it answers. First, let’s see its characteristic features. The Policy Note starts with examining the legal framework of the Competition Act 2010 (CA 2010). It analyzes the preamble of the law minutely. It cites the recitals of the preamble of the CA 2010, which states that ‘all spheres of commercial and economic activity’ of undertakings have to be regulated by the CCP insofar as competition is concerned. Widening its scope through the preamble, the Note discusses other provisions of the law (Sections 1, 2(l) (q), 28, 29, 50, 53, and 59). Basing its interoperability vis-à-vis other laws of the country, it relies on section 59 of the CA 2010 to argue that due to the fact that it is the latest legislation on the subject, it ought to occupy the field and shall have overriding effect over other laws. The reasoning and discussion is legalistic, but does not enjoy authority of interpretation of the law, the power of which rests with the constitutional courts in Pakistan.

The Note, after establishing the domain of CCP in competition-related matters of the telecom sector, takes into account the constitutional legislation dealing with the freedom of trade and business. It specifically discusses the policy legal framework of the Pakistan Telecommunication Reorganization Act 1996 (PTRA 1996), which is the principal legislation dealing with licensing and regulation of the telecom sector in Pakistan. The PTRA 1996, it may be noted, establishes the Pakistan Telecommunication Authority (PTA), the regulatory body vested with licensing powers in the telecom sector. The Note records that Section 4 of the PTRA 1996 provides to ‘regulate competition’ in the telecom sector, while its Section 57(ad) confers rule-making power to the federal government to prevent, prohibit and remedy the effects of anticompetitive conduct by licensed telecom companies. Despite the existence of the aforementioned legal provisions in the PTRA 1996, the Note chooses to interpret the interoperability of the PTRA 1996 and the CA 2010. The non-obstante clauses of the PTRA 1996, in the analysis of the CCP, stand upended by the non-obstante clauses of the CA 2010. Finally, the Note offered four recommendations for government, which are: first, that if and when, rules under Section 57 (ad) of the PTRA 1996 were made, it would ‘negate’ the exclusive mandate of the CCP; second, that the job of the PTA is to provide for benchmarks for quality and economic regulation; third, in the interest of ‘coherence’ and ‘certainty’, conflict between the jurisdictions of the PTA and the CCP be avoided, and finally, that the CCP may adopt collaborative approach through mutual consultation with the PTA to regulate competition in the telecom sector.

The analysis and recommendations of the CCP in its Policy Note beg for questions, which can best be answered by the specialists. Academia having no affiliations and turf-interests, may inform a debate that may help the policy-makers, and the judiciary, if and when, asked upon to adjudicate upon the matter. Some of the questions are raised here to excite thinking on the subject. In the first place, the relevant constitutional provisions may be examined afresh to ensure that the edifice of legal constructs is properly raised. Article 18 of the Constitution of Pakistan 1973 deals with private business and profession by treating it as a Fundamental Right. All the citizens have been guaranteed to do business or trade or to enter upon a lawful profession, and denial of such constitutional rights has been linked with serious legal consequences including enforcement through a writ of the constitutional courts.

The freedom, however, is not absolute. It has been punctuated through two provisos that provide for regulation through licensing system (Article 18(a)) and regulation in the interest of the competition (Article 18(b)). What exactly is the difference between the two provisions is a matter of some debate. Are the two provisos mutually exclusive or complementary? Should single watchdog check the enforcement of the two provisos or should there be separate enforcement bodies? What is the best policy option and what are the global best practices on the subject? Likewise, can a Policy Note issued by the CCP under its Section 29 be treated as binding? Or, is it recommendatory in nature? On a constitutional plane, can a statutory body (which is an extension of the executive) be conferred the function of interpretation of laws (which belongs to the judicature under the constitution)?

It may be useful to state here that the concept of competition law has its genesis in the anti-trust laws of the US. It is only after the global trade law (especially the World Trade Organization Treaty) came into force that more and more jurisdictions started taking competition concerns more seriously. It has some bearing on the economic system of the country as more of the anti-competition national organizations work in capitalists’ countries.

From the standpoint of investigations, the first and foremost line of inquiry in a competition-related case is to identify the market, which is to be investigated to know whether it has been abused by the dominant undertaking or not. The matter is not straightforward and must be handled with kid gloves; a slight mishandling can have serious economic and social repercussions. Foreign investors usually seriously look at the competition concerns, and any adventure can result in flight of foreign capital. Another matter that might be at the heart of the debate is the ex-ante (before the event) and post-ante (after the event) conditions of a business or trade or profession. After the bubble boom, incentivized policy-making was introduced to attract foreign investors in the field of telecom and information technology; it may be the case that ex-ante and post-ante regulation be dealt with separately.

In any case, the purpose of the write up is to ignite some debate on the subject and to nudge the academia to conduct research in these areas along with their technical studies. The problem with Pakistan, like many developing countries, is that technology is imported and acquired, but the relevant institutions that regulate the advancements are seldom imported; this needs to be remedied.


The views expressed in this article are those of the author and do not necessarily represent the views of or any organization with which he might be associated.

The writer holds an LLB (Hons) degree in Shariah & Law from the International Islamic University, Islamabad and BCL from the University of Oxford where he specialized in comparative corporate law, competition law and international economic law.

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