SBP permission for cell companies to use direct carrier billing revoked

ISLAMABAD: In the wake of lingering dollar liquidity crunch the country faces, the State Bank of Pakistan has withdrawn authorisation of direct carrier billing (DCB) for cellular mobile operators for payment in dollars abroad for vendors and different app service providers.

Citing an example, one telecom expert told The News on Thursday that if this crisis is prolonged, Google and other service providers might block their paid app services, creating a stumbling block for thousands of freelancers working from Pakistan and earning precious billions of dollars.

He said that customers paid for apps by deducting the amount from their billing system. Now the CMOs are required to pay 80 percent of the bill through the DCB system after paying 20 percent tax on services here in Pakistan. The SBP has now revoked DCB’s authorisation, putting a stumbling block in the payment of collected amount on behalf of vendors and apps.

This has caused alarm bells among the mobile cellular operators, who jointly called on Minister for Information Technology Aminul Haque here on Thursday to sensitise the government that the withdrawal of authorisation of DCB from the SBP would block millions of dollars in payments to different vendors and app service providers that also had the potential to halt the operation of CMOs in the country.

Now the Ministry of Information Technology and Telecom has convened an emergency meeting with the PTA chairman and other stakeholders for Friday (today) to devise an effective strategy for tackling this challenging situation and for taking remedial measures by writing to the SBP and the Ministry of Finance.

“We can easily assume that the millions of dollars in payments will remain stuck after the withdrawal of authorisation for payment through DCB, and it might prove a major challenge for ensuring smooth operation in the telecom sector,” official sources confirmed here on Thursday.

Now the government would ascertain the exact amount set aside for payment purposes through the DCB system to rectify the required steps in the coming deliberations.

According to an official statement issued by the Ministry of Information Technology and Telecom, Federal Minister for IT and Telecommunications Syed Aminul Haque said that he was well aware of the departmental issues confronting the country’s telecom industry and was struggling to settle these issues to stabilise the investment in the IT and telecom sectors.

The minister was talking to Aamir Ibrahim, the CEO of Jazz, Irfan Wahab Khan, the CEO of Telenor, and Hatem Bamatraf of Ufone, who called on him here on Thursday.

The heads of the telecom companies apprised the minister of different telecom industry issues.

Addressing the meeting, Federal Minister for IT and Telecom Syed Aminul Haque said that efforts were being made to resolve the telecom industry issues as the country’s economic stability was linked to the uplift of telecom industry. “We are determined to remove all bottlenecks at the departmental level to promote investment in Pakistan’s IT and telecom sectors.” He noted that an improvement in connectivity is linked to the telecom industry.

The telecom industry sources said that the CEOs of telecom companies reiterated that a healthy and stable telecom sector, the foundation of a country’s digital ecosystem, fuels virtually all sectors of the economy and is a prerequisite for consistent improvement in service quality for users.

However, the telecom industry’s financial health is severely impacted due to an unprecedented rise in the cost of operations: primarily fuel, electricity, interest rates, constantly increasing USD-pegged spectrum installments, and most recently, severe damages caused to critical digital infrastructure by floods, to the extent that now it threatens the very survival of the telecom sector.

Aimed at partially mitigating the “digital emergency,” the telecom sector seeks urgent policy interventions from the government to provide critically needed fiscal space to ensure its survival and support Pakistan’s digital inclusion objectives. This includes denominating spectrum payments in rupees and extending the payment terms to 10 years instead of five; suspending the industry’s annual contribution to the Universal Service Fund and Ignite for two years, and reducing the withholding tax from 15% to 8% on essential telecom services.