Pakistan has only two internet backbone providers through submarine cables: PTCL and TWA. To ensure quality internet service, Nayatel used to purchase bandwidth from both providers. However, due to their duopoly, PTCL and TWA have been charging wholesale rates significantly higher than their own retail service and informal cable TV operators. Squeezed by these high prices, which are pegged to the dollar, Nayatel decided to shift all its bandwidth to TWA. Subsequently, Nayatel sought to purchase separate capacity from Zong and Telenor to improve quality.

However, PTCL took a reprehensible step by blocking Nayatel’s traffic on its backbone originating from Zong, which constitutes a criminal offense under the Telecom Act.

Ironically, PTCL sells more than 1,000 Gbps, five times Nayatel’s total bandwidth, to four cable TV operators: KK, Connect, InCable, and Waylink. TWA sells approximately 400 Gbps to over ten other cable TV operators. These cable TV operators neither impose GST (19.5%) nor withholding tax (15%), totaling 34.5%, on the majority of their customers, nor do they report their revenues correctly, thus evading significant taxes and causing substantial losses to the national economy.

Formal operators like Nayatel face challenges from PTCL and TWA on bandwidth prices, illegal IP blocking, PKR depreciation, and bear the burden of taxes. According to CEO Nayatel Wahaj Siraj, Nayatel alone pays PKR 2.3 billion per year in the form of withholding taxes. The loss of government taxes from the 20 cable operators purchasing 1,800 Gbps bandwidth from PTCL and TWA would exceed PKR 20 billion per year. This situation calls for reflection among regulators such as PTA, FBR, etc.