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PTA’s decision Lacked Rationality while ensuring a level playing field for all operators and failed to promote Fair Competition and reduce costs for Consumers --- Islamabad High Court set aside PTA Agreement

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PTA’s decision Lacked Rationality while ensuring a level playing field for all operators and failed to promote Fair Competition and reduce costs for Consumers --- Islamabad High Court set aside PTA Agreement

Islamabad 07-12-2024: In a significant ruling, the Islamabad High Court (IHC) has set aside a decision by the Pakistan Telecommunication Authority (PTA) that declared a tripartite agreement involving Pakistan Telecommunication Company Limited (PTCL), Link Dot Net Telecom Limited (LDN), and HKT Global Singapore PTE Ltd. invalid under the Pakistan Telecommunication (Re-organization) Act, 1996.

The judgment, authored by Mr. Justice Babar Sattar, resolved appeals filed under Section 7(1) of the Telecom Act, challenging PTA’s May 14, 2018 order. PTA had earlier held that the agreement, which allowed the provision of broadband capacity through submarine cables, violated the Telecom Act, rules, and LDI License conditions.

The Islamabad High Court (IHC) ruled that HKT Global, as a member of a submarine cable consortium, did not require a PTA license because it does not provide direct telecommunication services within Pakistan. The Court emphasized that the regulatory framework under Section 20(1) of the Telecom Act only applies to entities operating within Pakistan’s territorial jurisdiction.

The judgment reinforced the rights of Long Distance and International (LDI) licensees, such as LDN, to acquire broadband capacity from submarine cable consortia under the De-Regulation Policy of 2003. The Court found no regulatory bar preventing LDN and PTCL from entering into the agreement with HKT.

The Court criticized PTA for misinterpreting Section 25(3) of the Telecom Act, which prohibits agreements inconsistent with a licensee’s obligations. It noted that PTA failed to explain how the agreement violated licensing conditions or why HKT’s indirect capacity provisioning constituted a telecommunication service in Pakistan.

Mr. Justice Babar Sattar highlighted that PTA’s decision lacked rationality and failed to consider the agreement’s potential to promote fair competition and reduce costs for consumers. The Court reaffirmed that PTA must facilitate innovation and modernization while ensuring a level playing field for all operators.

In addressing international submarine cable operations, the Court noted that global practices, including those in the United States and Singapore, do not require consortia members to obtain licenses unless they establish a physical presence in a country. It cautioned against overregulation, which could stifle competition and increase costs.

The Court allowed the appeals, declaring PTA’s order invalid and emphasizing the need for regulatory clarity and proportionality in the telecom sector.