Broadband Counter Strike By PTCL

In line with government’s plan and PTA’s Broadband policy to increase penetration of Internet in general and broadband in specific, PTCL has rolled out a new promotion “Broadband Pakistan”. PTCL has also slashed rates for Internet Service Providers (ISP’s). Besides PTCL’s much discussed brand reputation for different products, service issues, past experiences from Paknet and aggressive resistance from ISP’s in this regard, the overall launch of this new service by PTCL has been much aggressive and comprehensive.

From packages to marketing communication, PTCL has done much better this time in comparison to roll out of its previous products. Broadband packages are being offered for as low as Rs1199/month for port speed of 256kbps, especially 1Mbps @ Rs4999/month has grabbed them serious attention from potential prospects including SMEs, Call centers, Cable operators besides individual/residential users. Huge billboards displaying “Get Thrilled, Go DSL” and huge banners hanging at all PTCL exchanges have helped marketing of initial roll out.

ptcl_products_thumb.jpgThe response from customers in this phase is mixed. Questions have been raised with respect to shared bandwidth, technical support, service quality and putting caps on port speeds, however, so far customers have good remarks to share i.e. getting over 110kbps on average at 1Mbps circuit is almost dedicated bandwidth. Furthermore, keeping in view that PTCL has just revamped and stepped into this segment, problems at initial stage are no exception. On the other hand one knows that if PTCL keeps things moving in the right direction, they have the biggest network, infrastructure, resources and financial strength to serve customers smoothly nationwide. Moreover, the scenario for service quality, bandwidth and technical support will get clearer after six months or a year when PTCL will have ample traffic to manage. Right now, for broadband segment, things are going in favor of PTCL.

The case for other Internet Service Providers (ISP’s) in competition with PTCL is also valid. ISP’s have been unable to slash down the prices to meet aggressive move by PTCL as they are purchasing bandwidth at very high price. On the other hand, all major ISP’s have been serving the market since long and definitely have developed strong subscriber base and competence on service standards.

Now PTCL has announced bandwidth tariff reduction on Saturday 7th July, 2007, providing fair battleground to ISP’s up to some extent. 37% tariff reduction has been announced for Karachi based companies and 25% for other telecom regions. This will help ISP’s to make their tariff’s competitive, but is this going to be a healthy practice? Will it help ISP’s to sustain their operations in long run? ISP’s have already been in cut-throat competition over individual, SMEs and Corporate customers and pricing has been the core differentiating factor. Now, reducing prices means reducing revenues and to check revenue companies will require aggressive marketing efforts to increase volume, but customers will keep on switching ISP’s. Co-location costs, stream charges, network maintenance, equipment depreciation, OPEX & CAPEX will keep on adding obstacles in long term stability for ISP’s. Telecommunication industry is evolving to a phase where there will be a battle over networks for competitive advantage. Companies must understand that PTCL is not a Government enterprise anymore; they are just another competitor with its own strengths and weaknesses.

Their competitors will eventually have to find out ways to move to their own infrastructure, remove the major dependency if not 100% to get rid of the enormous costs being paid to PTCL and from dependency on its network to react strategically, otherwise anytime PTCL reduces the price, babies will keep crying. Two companies Multinet Pakistan (Pvt.) Ltd (A Telecom Malaysia Company) and Wateen Telecom have already taken lead and are laying Optical Fiber Backbones (Long Haul) over 5000kms from Karachi to Peshawar. Multinet has also laid OFC redundant rings (Metronet) in LHR and KHI and is doing so in ISB. Wateen is ambitious and aggressive about its WiMAX. However, the importance of the fact here is that companies with their own networks will not remain dependant upon PTCL and will have various revenue sources. They will provide broadband, WiMAX, Managed services, Bulk bandwidth, IPLC, DPLC, VOIP, Video Over IP etc to all from individual users to commercial giants and only such companies will be able to compete with PTCL in long run.

Written By Atif Tahir – originally published at State of Telecom in Pakistan blog .

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