Zong responds to PTA spectrum order with compensation demand

18 Dec 2020

Chinese-owned cellco Zong has reportedly filed a claim for PKR610 billion (USD3.8 billion) in damages from industry watchdog the Pakistan Telecommunication Authority (PTA), ProPakistani writes, citing unnamed ‘reliable’ sources. According to the sources, the claim seeks compensation against investments and losses suffered by the cellco due to long-standing spectrum interference issues. The operator has reportedly argued that the interference resulted in customer churn and revenue loss, imposed a competitive disadvantage on the provider and forced the company to make substantial investments in network infrastructure to ameliorate its signal. Further, Zong highlights that the responsibility for keeping spectrum interference lies with the PTA and the Frequency Allocation Board (FAB) and that the two bodies have failed to do so. The report follows – and is understood to be a response to – a ruling earlier this month that Zong’s use of 2×6.6MHz spectrum in the 1800MHz band since October 2019 is unauthorised and illegal. As part of the ruling, the PTA ordered Zong to vacate the spectrum within seven days and to pay the appropriate licence fees for the spectrum for the period the airwaves were illegally used, on the basis of a price of USD29.5 million per MHz per year for 15 years.

In 2007 the cellco had reported interference in its 900MHz band spectrum, which was later determined to be caused by cross-border interference from Indian CDMA networks. To remedy the situation Zong was awarded temporary additional spectrum in the 1800MHz band to be used only within the affected border areas of Punjab and Sindh. The permission was renewed several times but in 2016 the specific replacement frequencies were changed and it was determined that the renewal would expire with Zong’s 2G licence in October 2019. Further, for the renewal of Zong’s 2G licence, the cellco would be offered spectrum in the un-interfered portion of the 900MHz range, if available. Zong continued to use the 1800MHz spectrum after the October 2019 expiry, however, and responded to a show cause notice (SCN) from the PTA on the matter by declaring that the temporary replacement airwaves did not compensate for the losses suffered due to the interference and, therefore, any attempt to withdraw the 1800MHz allocation would be ‘unjust’. The cellco went on to note: ‘The Authority is obligated … to promote fair competition in the market. The SCN and the directions contained therein have placed [Zong] at a disadvantage and is aimed at distorting the market equilibrium. Therefore the SCN is merely a colourful exercise of Authority aimed at giving advantage to other telecom operators without addressing the root cause i.e. interference in the spectrum allocated to [Zong].’ Underlining its concerns, the operator noted that the PTA’s promise to award un-interfered spectrum proved to be ‘purely hypothetical’ as its 900MHz allocation is still subject to severe cross-border interference.

For its part, the PTA argued that Zong was given other options for its licence renewal but opted to retain its existing spectrum. Further, the PTA noted that its decisions were in line with agreements made with the operator, and that its actions were in accordance with the law.