Is PTCL throttling one of its competitors through anticompetitive practices?

This isn’t the first time you will read about the anticompetitive market practices of the Pakistan Telecommunication Company Limited (PTCL). The majority government-owned telecommunication company has been accused of abusing its dominant market power to resort to predatory pricing, collusion and using underhanded tactics to maintain its monopoly more than a few times. 

For instance in 2006, PTCL was taken to the Competition Commission of Pakistan (CCP) for charging abnormally high bandwidth tarriffs to internet service providers. In 2010, Internet Service Providers Association of Pakistan (ISPAK), LINKdotNET and Micronet filed a complaint to the Pakistan Telecommunication Authority (PTA) in which they accused PTCL of charging very high wholesale internet bandwidth tarrif due to which operators were suffering losses. 

In 2012, the CCP found out that PTCL had abused its dominant position in the market for the provision of DSL services through the practices of predatory pricing and refusal to deal, ultimately resulting in forcing five out of 11 of PTCL’s competitors out of market. 

In 2013, PTCL was fined a massive Rs8.30 billion for violation of Competition Act. In 2016, PTCL was accused of colluding with Bahria Town to keep internet service providers from laying fiber infrastructure, giving PTCL a monopoly in Bahria Town. 

In yet another instance of abuse of dominant position, PTCL has been accused of throttling another one of its competitors, Nayatel, through aggressive pricing and forcing other vendors to not sell services to Nayatel. 

PTCL versus Nayatel

So what happened now? In a letter written to the Pakistan Telecommunication Authority (PTA) on February 14, 2024, Nayatel accused PTCL of not only selling it wholesale internet bandwidth at exorbitant rates, it was also forcing others to not sell it to Nayatel. 

Internet service providers like Nayatel buy internet bandwidth on wholesale rates from providers like PTCL and then sell the internet to consumers on retail rates. There are only two wholesale internet bandwidth providers through undersea cables in the country. which are Pakistan Telecommunication Company Limited and Transworld Associates. Nayatel had been buying internet bandwidth from both the providers but drew back from PTCL in November last year because of high prices charged by the monopolist. 

Now here is what the internet service providers do: to add redundancy in their network, that is to say providing multiple paths for traffic so that data can keep flowing in the event of a failure, they try to get the internet bandwidth from more than one providers. Nayatel tried to do that. It tried to get the internet bandwidth from Zong and Telenor, both of which buy the internet bandwidth from PTCL and then resell it. 

However, Nayatel alleges it found out during testing with China Mobile Pakistan that PTCL was not allowing Nayatel’s IP addresses advertised by CMPak. According to details in the letter, despite repeated requests by China Mobile Pakistan, PTCL did not allow Nayatel traffic to pass through its network, obstructing Nayatel to buy bandwidth at competitive prices. A copy of an email from Zong, available with Profit, reads that Zong was unable to get Nayatel’s IPs approved from PTCL and hence could not proceed with Nayatel’s request of giving it the internet bandwidth as a reseller from PTCL. 

Likewise, Nayatel also alleges that PTCL refused Telenor to allow Nayatel IPs through Telenor on PTCL’s network. According to Nayatel, the excuse PTCL has for holding others from providing internet to Nayatel is because they had commercial agreement with Zong and Telenor that they will not resell PTCL’s bandwidth to PTCL’s existing customers. 

Nayatel contends, however, that it isn’t PTCL’s existing customer anymore but the state-owned company was still taking such coercive measures in garb of commercial agreement, which is illegal according to the PTA and CCP laws. 

Why else could PTCL logically be doing this? To force Nayatel to buy the internet bandwidth from PTCL directly, rather than through the two resellers, at inflated rates which had already pushed Nayatel to withdraw from PTCL earlier. And why would PTCL be selling the wholesale internet service to Nayatel specifically at inflated prices? Because Nayatel is not only a customer but also a competitor of PTCL. 

In conversation with Profit, Wahaj Siraj, the CEO of Nayatel said that his company competed with PTCL in fiber to the home (FTTH) market, which is broadband service provider through optical fiber.  According to Wahaj, it is a market with a total of around 1 million broadband customers in which PTCL has around 400,000 active customers and Nayatel has 160,000. The other providers in this space are names like Stormfiber, Transworld, Wateen and Multinet. The case of PTCL throttling only Nayatel’s internet is reportedly not the c ase with other broadband providers but Nayatel does complain that while it is being throttled, PTCL is selling internet bandwidth to some of the other providers on favourable rates. 

No response has yet been received by PTCL on the issue. 

There hasn’t been a strong directive from the Pakistan Telecommunication Authority, the telecom regulator. According to a letter seen by Profit, the PTA has only asked the relevant stakeholders; PTCL, Nayatel, Zong and Telenor to resolve their issues withing three working days. But that is perhaps what the PTA can at most do. PTCL has earlier been able to block moves by the PTA as well as the CCP by taking stay orders from the court.