The Competition Commission of Pakistan (CCP) has issued an order directing the management of DHA-I Islamabad to restore a level playing field by granting Nayatel the ‘Right of Way (ROW)’ to provide Cable Internet and Telephony Services (CIT Services) on the same terms and conditions as other existing operators.
The CCP conducted an investigation after receiving Suo moto notice of complaints and concerns from residents of DHA-I Islamabad who stated that they were deprived of an alternative provider of CIT services, which were limited to only two operators, namely Pakistan Telecommunication Company Limited (PTCL) and DHAI Teleman.
They said that the DHA was refusing to let Nayatel to operate in the area despite the company’s enthusiasm in providing its services.
The Right of Way (ROW) provides an infrastructure for internet service providers to deliver CIT services. DHA management, according to allegations, granted ROW to PTCL and DHAI Teleman in DHA-1 while denying the same to Nayatel on comparable terms and conditions.
It was stated that DHA’s management established an entry hurdle for Nayatel by proposing unequal terms and charging a greater rate of return on investment (ROW) than current internet service providers.
The CCP’s investigation concluded that DHA management misused its position prima facie in violation of Section 3 of the Competition Act, 2010, by refusing to allow Nayatel to operate in the relevant market, and recommended that DHA be prosecuted under Section 30 of the Act.
After hearing from the parties, the bench issued the order, in which it applied the ‘essential facility theory’ to the case and stated that in the modern period, CIT services are a critical requirement for individuals, both personal and commercial.
Additionally, the ruling indicated that inhabitants of DHA-I were requesting CIT services from Nayatel, a supplier of CIT services via Fiber-to-the-Home (FTTH). However, DHA-administration, I’s abusing its dominating position, refused to provide Nayatel a no-objection certificate (NOC) to establish its infrastructure within DHA-I Phase-I and other sectors.
According to the order, DHA-I possessed a monopoly position in the relevant market and had already awarded ROW to four parties, namely PTCL, Transworld, Wateen, and its own subsidiary, DHAI Teleman, for the purpose of providing (G-PON) and related CIT services to DHA-I inhabitants. Whereas Nayatel was the licensee seeking the ROW.
Existing service providers will collaborate with DHA-I on a cost-sharing basis rather than a revenue-sharing basis. The ruling notes that DHA-I has provided no rationale for the differential in charges offered to Nayatel and other incumbents, which amounts to discrimination and imposition of differential conditions to the same transaction in violation of Section 3 (1), read with subsection 3(e) of the Act.
The order is also supported by a directive issued by the Ministry of Information Technology and Telecommunications in October 2020, titled “Public and Private Right of Way Policy Directive” (the Policy Directive), which stated that “the Public Authority shall not discriminate against any licensee in charging right of way fees and shall not grant any licensee differential or preferential treatment in assessing right of way fees.”
Taking into account all relevant circumstances and to provide DHA-I with an opportunity to correct its behaviour, it was ordered to offer Nayatel the right to use the ROW on terms and conditions no less favourable than those offered to incumbent service providers within 90 days of the date of the order.
For the time being, the CCP has not levied any punishment on DHA. However, in the event of non-compliance, DHA-I shall be responsible to pay Rs. 2 million as a penalty for violating Section 3 of the Competition Act, 2010, in addition to any other applicable penalties under Section 38 of the Act.
Additionally, DHA-I has been directed to file a compliance report with the Commission’s Registrar no later than seven (seven) days from the date such offer is made to Nayatel.
