UNDERSTANDING OF TELECOMMUNICATIONS LAW

UNDERSTANDING OF TELECOMMUNICATIONS LAW <!--[if gte mso 10]> UNDERSTANDING OF TELECOMMUNICATIONS LAW By Irfan Mansoor Gill, Advocate, Lahore 1. Introduction Traditionally and historically, telecommunication services in Pakistan were provided by a monopolist operator called as Telephone and Telegraph Department (T and T). Monopoly structures have tended to be conservative and less reactive to new technological innovations and prone to concentrate more on achieving revenue targets than on quality of service and convenience to the consumers as is clear in the case of UK before 1981. Since 1990s, Pakistan's Telecommunication Market has witnessed unprecedented growth on entry of new players and calling party pays principles. I have made an issue specific overview of Telecommunication Laws in Pakistan with necessary references to the decisions and opinions expressed by UK and EU telecom regulators. I have also tried to discuss the role of International Telecommunication Union (I'1'U) and World Trade Organization (WTO) in creating an effective regulatory environment in Telecommunication Markets at international level. The Telecommunication (Re-Organization) Act, 1996 (Act) along with a number of specific rules, regulations and guidelines regulate the telecommunication market of Pakistan. The Pakistan Telecommunication Authority (PTA) is a regulator of Telecommunication Services in Pakistan and has been established under section 3 of the Act with specific mandate to protect the interests of competitors and consumers. 2. Licensing. Every provider of public telecommunication service needs a licence from PTA before commencing its operations in Pakistan under section 20 of the Act. Licensing is a key aspect of telecommunication regulation and is a form of Ex-ante Regulation. It can create a legal certainty for new entrants in the market where the telecommunication regulatory or general framework is not comprehensive and in these circumstances conditions imposed and rights accrued in licences can serve as substitute for such frameworks1. 1. Telecommunications Law and Regulation by Ian Walden and John Angel, Ch.5, P.153. (a) Conditions and criteria for grant of licence As per section 21 of Act and Rule 4 of Pakistan Telecommunication Rules, 2000 (Rules), Pakistan Telecommunication Authority (PTA) while granting licence to an individual, class of person, company or corporation shall take into account following factors: (i) The financial and economic viability of the applicant. (ii) The applicant's experience in telecommunications and relevant past history. (iii) The technical competence and experience of the applicant's management. (iv) The public interest and benefits to users of telecommunication services. (v) The nature of service proposed and the viability of the applicant's business plan. (vi) The quality of the applicant's telecommunication system or network. (vii) The terms of bid made by the applicant where the licence is to be issued under a competitive process. (viii) Policy directives of Federal Government issued under section 8 of Pakistan Telecommunication (Re-Organization) Act, 1996 on the matters relating to telecommunication. Every licence granted under the Act shall contain conditions requiring the licensee to adhere to the provisions of Act, and rules and regulations made there under, payment of fees for grant or renewal of licence, inspection and approval of telecommunication equipment by PTA, consumer protection issues and quality of service standards made by PTA. 3. Interconnection. Interconnection is the physical means of linking two different networks for the exchange of traffic so that users of one network can communicate with the users of another network. The basic philosophy behind interconnection is to minimize the wasteful and uneconomic duplication of telecommunication networks and to ensure the level playing field between incumbent operator and new entrants. Rule 13-26 of Rules and Interconnection Guidelines, 2004 (Guidelines) imposes obligations on all operators to negotiate and provide interconnection at economically feasible points on reasonable request. (a) Principles of Interconnection. According to para. 5 of Guidelines, following principles shall be considered while requesting, negotiating and granting interconnection: (i) All operators are obligated to provide interconnection at any economically feasible point. The requesting operator can take access from any other point on paying additional costs. (ii) Interconnection and related service facilities shall be provided on the basis of unbundled network elements and charged accordingly. Network unbundling means provision of services by an operator separately from each other. (iii) The operators shall not unfairly discriminate the terms of interconnection among different operators. (iv) The interconnection terms of all operators other than terms of confidential nature as determined by Authority, shall be open to access to all licensed operators. (v) Charges for interconnection services shall be cost oriented. (vi) Cost of inefficiencies of an operator should not be passed on to other operators through higher interconnection charges. 15-30/05(ca)/PTA PTA expressed in the determination on Fixed-Mobile and Mobile-Mobile Interconnection Charges, 2005 that using the cost of least efficient operator for the purpose of determination of Mobile Termination Rate would not provide incentives to the operators in enhancing their efficiencies rather inefficiencies would be considered to be allowed to permeate into other operators business. (vii) Interconnection arrangements should encourage efficient and sustainable competition. (viii) Charges relating to Universal Service Obligations (USO) and Access Provision Contributions (APCI should be identified separately not bundles with interconnection charges. 4. Significant Market Player Operator (SMP) According to Rule 17 of Rules, an operator shall be presumed to have significant market power when it has a share of more than 25% of a particular telecommunication market. Pakistan Telecommunication Authority can declare an operator significant market player even it does not have market share of 25% or more and can determine an operator non-significant market player even it has 25% or more of market power. While making determination, PTA shall take into account size, experience and financial resources of operator and its ability to influence the market. PTA has determined and declared Pakistan Telecommunication Company Limited (PTCL) as Significant Market Player (SMP) in Local Loop (LL) and Local Distance and International (LDI) market and Mobilink as Significant Market Payer (SMP) in cellular telephone market. Pakistan Telecommunication Authority is responsible to undertake necessary market researches and survey for the determination of significant market player in any particular market. Michelin By v. Commission [1983] ECR 3461, para. 6. European Commission redefined the concept of an operator with "significant market power" in the following terms, based on the Court of Justice jurisprudence in the above case. "An undertaking shall be deemed to have significant market power if, either individually or jointly with others, it enjoys a position equivalent to dominance, that is to say a position of economic strength affording it the power to behave to an appreciable extent independently of competitors, customers and ultimately consumers"2 2. European Union Framework Directive, Article 14(2). (a) Obligations on SMPs Proper ex-ante and ex-post regulations should be in place to check and regulate the behaviour of significant market player (previous monopolies) otherwise they could engage in anti-competitive practices and could distort the market shape. Additional obligations should be placed on SMPs to provide an opportunity to the new entrants to compete in an effective manner. Rules and Guidelines impose certain obligations on SMPs for the creation of transparent and competitive telecommunication market. Some of obligations are as under: (i) Reference Interconnection Offer (RIO) All SMP operators are obliged to prepare and submit Reference Interconnection Offer to PTA within one month of its determination as SMP operator by PTA by virtue of para. 6 of Guidelines. Reference Inter-connection Offer means an offer document setting out terms and conditions on which SMP operator will offer interconnection. 14-223/L&A/PTA "PTA examined the RIO of PTCL and determined that current origination and termination charges proposed by PTCL/appellant would not result in sufficient margin to new operators which shall ultimately affect the growth of fair competition in the telecommunication sector". (ii) Request for Interconnection The SMP operator is obliged to meet all reasonable requests for interconnection at economically feasible points of interconnection (PoI). Points of interconnection are the points where two different networks actually communicate with each other. (iii) Leased Lines and Co-Location All SMP operators are obliged to provide leased lines and co-location facilities to its requesting operator on cost based charges. (iv) Number Portability and Carrier Pre-Selection All operators are required to assure that customers can keep their numbers while changing network provider and the option of choosing any network provider for the carriage of particular part of their traffic. Office of communication ((Acorn) in UK and European Commission (EC) in EU has also imposed similar but more onerous obligations on SMP operators in relevant markets such as obligations on British Telecom (BT) to meet all reasonable requests for access and interconnection including sharing of innovations. (v) Charge controls The markets which are not effectively competitive and there is little prospect of this changing in the short term future, the imposition of charge controls on SMP operators is generally considered appropriate. Sub-Rule (4) of Rule 16 of Rules authorised PTA to determine the SMP operator's interconnection charges. (vi) Accounting Separation The main purpose of obliging operators to prepare and publish regulatory financial information is to prevent discrimination and anti-competitive cross subsidy. The information so obtained may be used in setting charge controls, conducting sector reviews and in specific case work. 5. Consumer Protection Proper regulatory and protective framework to safeguard and address the grievances of consumers of telecommunication service is essential for the healthy development of telecommunication sector. The philosophy behind the consumer protection laws is to protect the interest of consumers from those who own, control and provide the telecommunication services so that they could not engage in practice prejudicial to consumer interests. Data Protection Act, 1998 and Rules framed by office of communication (Ofcom) provide effective protections to communication users in UK. In Pakistan, section 21 of Act and Schedule 2 to Rules contain provisions regarding safety and protection of interests of consumers of telecommunication services, some of these protections are as under: (a) Standard terms and conditions The licensee shall make available to its customers a set of standard terms and conditions which will apply to its contractual relationship with its customers while providing any fo-m of telecommunication services. "Complaint against unfair contract terms" 2006 A consumer made a complaint to Ofcom in UK against 3-Mobile unfair contract terms on 9th January 2006 of com considered the terms and conditions that constitute the cellular service standard agreement and directed the 3 to amend the terms to the satisfaction ofcom. (b) Publication of prices All licensees of telecommunication services are required to publish a notice specifying the prices or specifying the method in which prices shall be determined and terms and conditions on which services shall be offered to its customers. (c) Code of practice for consumer affair All licensees are required to prepare and publish in consultation with PTA a code of practice covering issues relating to principle of non-discriminatory treatment of customers, commitment to provide un-interrupted services, privacy and confidentiality of customers. (d) Confidentiality of customer information All licensees shall take reasonable steps to protect the confidentiality of its customers and shall specify the procedures and circumstances under which customer's information can be disclosed to third parties. All the employees should be bound by confidentiality code who deal and process customer information so that they could not make un-authorized disclosure of information. Halford v. United Kingdom (1997) IRLR 471 In this case, "the European Court of Human Rights ruled that interception of telephone calls made on an internal telecommunication system operated by Merseyside Police was an infringement of Article 8 of the European Convention of Human Rights. Article 8(1) provides that everyone has the right to respect for his private and family life, his home and his correspondence". Katz v. United States 389 US 347 In this case, "Supreme Court of U.S.A. held that electronic surveillance was a search and seizure for Fourth Amendment purposes. Fourth Amendment to the US Constitution protects citizens against unreasonable searches and seizures". (e) Redress of customer's complaint All licensees shall develop a suitable system for redress of customer's complaints and shall set up an independent arbitration procedure for resolution of disputes. (f) Role of Regulator Pakistan Telecommunication Authority as a telecom regulator has the responsibility to protect and safeguard the interests of users of tele communication services by virtue of sections 4 and 21 of Act and has been given adequate powers to enforce the consumer rights. 168/L&A/PTA/2004 "In this case, PTA reiterated that being a regulator, one of its responsibilities is to protect the interest of user and consumer". Any consumer of telecommunication services can make a complaint to PTA on the contravention by licensee of any provision of Act, Rules, guidance and the contract if the licensee fails to resolve the dispute on consumer's complaint within reasonable period of time. 6. Special Funds (Sec. 33 Pakistan Telecommunication (Reorganization) Act, 1996) (a) Universal Service Fund Provision of Telecommunication services does not bring same profits or advantages in every part of the country. Some regions can be very profitable while other less populated areas may not generate same rate of profits so a gap can arise between information rich and information poor if no incentives are offered to the telecom operators for the provision of telecom services in those uneven and underdeveloped areas. Universal Service Fund (USF) has been created to provide necessary funding for the development and provision of telecommunication service in those un-served and remote areas. (b) Research and development fund A research and development fund has been created to support the research and development of communication infrastructure and technology. (c) Access Promotion Contribution (APC) According to Access Promotion Rules, 2005, Long Distance and International (LI)I) operators are entitled to retain a fixed share of termination charges paid by International carriers and the remaining amount in the form of access charges will be paid to local loop (LL) operators to encourage LL operators to invest in network expansion and capacity enhancement to increase teledensity. 7. Pakistan Telecommunication Authority (PTA) PTA is the regulator of telecommunication services in Pakistan and has been given exclusive powers to grant, enforce and cancel the licences of telecommunication operators. PTA is a body corporate established pursuant of section 3 of Act which, among others, performs the following functions: (i) Regulate the establishment, operation and maintenance of telecommunication system and provision of telecommunication services in Pakistan. (ii) Investigate and adjudicate on complaints and other claims made against the licensees arising out of alleged contravention of the provisions of Act, Rules made and licences issued thereunder and take action accordingly. (iii) To operate and safeguard the interest of consumers. (iv) To do all other acts that are necessary for the creation of competitive and transparent telecommunication market in Pakistan. 8. Appeal/Revision Any person aggrieved by the decision of PTA can file an appeal in the High Court within thirty days who shall give a decision in ninety days. Where a decision has been made by the officer of authority under delegated powers, appeal shall lie to authority/PTA in this case. 9. International Regulatory Regime By its very nature and scope, Telecommunication is an International subject and this necessitates the joint working of world community in setting of standards in technical as well as operational aspects. The role and consensus of world community is also required in arriving at workable solutions in the use of scare resources in telecommunications such as radio frequencies. Since the growth of telecommunications requires the establishment of links across different jurisdictions therefore to achieve this, the telecommunication has been subject to conventions and treaties under International law. (a) International Telecommunication Union (ITU) The International Telecommunication Union (ITU) was founded in 1932 and is one of the oldest intergovernmental organizations. It became a specialized agency of United Nations System in 1947. Based in Geneva, ITU exists to further the development of telegraph, telephone and radio services, to promote International co-operations for the use of telecommunication and the development of technical facilities and to allocate radio frequencies3. 3. Telecommunications Law and Regulation by Ian Walden and John Angel, Ch.12, P.474, 475. (i) Legal status of the ITU As an International treaty, the member States are bound to follow constitution and convention of ITU. (b) World Trade Organization (WTO) WTO was established in 1994 to facilitate the implementation, administration and operations of certain multilateral trade agreements [Article III (1)]. The unique feature of WTO is the establishment of dispute settlement body to enforce the obligations of member states and is a key factor in pushing the WTO to the forefront of intergovernmental organizations. The most directly relevant of the WTO administered trade agreements for the telecommunication industry are the General Agreement on Tariffs and Trade (GATT), in respect of telecommunication equipment, and General Agreement on trade in services (GATS)4. 4. Telecommunications Law and Regulation by Ian Walden and John Angel, Ch.12.4, P.489. (i) General Agreement on Trade in Services (GA1'Sj GATS contains an Annex, Basic Agreement on Telecommunication (Fourth Protocol) and reference paper. GATS imposes obligations on member states to substantially open up their telecommunication markets to International competition and to stop patronizing the monopolies. CATS contains provisions regarding most favoured Nation Treatment (MFN), major supplier, essential facilities and allocation and use of scarce resources. In respect of MFN exemptions, a number of countries specified accounting rates as outside the scope of basic agreement including Pakistan, India and Turkey. (ii) Status of WTO Law General Agreement on trade in Service is an International agreement and the member States are bound to honour their commitments made in it. The reference paper as a unique set of International legal principles for the telecommunication sector is not only pro competitive but sufficiently detailed to cons1,itute legal grounds upon which to instigate legal proceedings in the event that a member State fails to comply.5 5. Telecommunications Law and Regulation by Ian Walden and John Angel, Ch.12 4.4, P.496 European Court of Justice has, to great extent, clarified the status of WTO law in following cases. Commission v. Germany [1996] ECR I-3989 "It was held that where the community has entered into an International agreement, the provisions of secondary community legislation, must, as far as possible, be interpreted in the manner that is consistent with those agreements." Hermes International v. FHT Marketing [1998] ECR I-3603 "The Court. held that national Courts when interpreting a community measure that falls within the scope of WTO Agreement, must apply national legislation 'as far as possible' in the light of wording and purpose of agreement."