The Auditor General of Pakistan has raised serious concerns over the allocation of free backhaul frequencies without the formation of an Administrative Incentive Pricing (AIP) framework by the Frequency Allocation Board (FAB).
According to the audit report, the FAB’s actions violate the stipulations outlined in the Telecommunication Policy, 2015, which mandates that microwave spectrum assignments should be subject to an AIP mechanism. The policy clearly states that the Pakistan Telecommunication Authority (PTA) must consult with stakeholders and seek approval from the Federal Government before implementing the AIP framework.
According to the audit report, several policy clauses, including Paras 8.12.1, 8.12.2, and 8.12.3, emphasize the need for AIP to manage microwave spectrum assignments effectively. Additionally, Para 8.8.1 of the Telecommunication Policy, 2015, highlights the importance of rational spectrum allocation to prevent backhaul bottlenecks in future technology rollouts, particularly in areas lacking fiber infrastructure.
The policy outlines that the spectrum should be allocated, assigned, and charged to licensees and other users through the AIP mechanism, underscoring the need for a structured approach to spectrum pricing.
During its 48th meeting, the FAB, under the Cabinet Division in Islamabad, approved the allocation of six additional microwave backhaul channels to telecom operators CM Pak and Ufone. The record indicates that the Inter-Services Intelligence (ISI) supported these proposals for a one-year period and recommended that the AIP framework be formulated for microwave spectrum assignments. However, the audit observed that FAB allocated these backhaul frequencies to operators without finalizing the AIP framework or establishing a fee structure, resulting in a significant loss to the national exchequer due to the non-recovery of fees.
The audit report criticized the FAB for allocating free frequencies without adhering to policy requirements, which the auditors argue reflects mismanagement and a failure of internal controls, especially amid limited state resources. Despite the ISI’s suggestions and policy guidelines, FAB’s actions were deemed inconsistent with the Telecom Policy, leading to financial implications for the government.
In response to the audit findings, FAB management stated that the Board’s recommendations were communicated to the Ministry of Information Technology and Telecommunication (MoITT) and the PTA for the formulation of the AIP framework as per the Telecom Policy, 2015. They further argued that the responsibility for fee collection lies with the PTA, not the FAB, as outlined in the Telecom Act, 1996. However, the audit dismissed this explanation, reiterating that the Telecommunication Policy, 2015, explicitly requires that backhaul frequency allocations be charged to licensees through the AIP mechanism.
The issue was discussed in the Departmental Accounts Committee (DAC) meeting held on December 21, 2023. The DAC directed FAB to forward the matter to PTA and MoITT for further response, but no progress was reported until the finalization of the audit report.
The audit recommends that accountability be established for the allocation of free backhaul frequencies without the implementation of the AIP framework, calling for immediate corrective measures to align with policy mandates.
