Telecommunication in Pakistan: still “2G”?

There were times when people used to work hard, day in and day out to get food for their loved ones. One of my teacher once said that he had bad times in his initial post marriage years and he had to start day lightening to earn money. Now why is everyone running so much after for food. The reason is simple; it’s not a rocket science. It is our necessity.
In today’s world the meaning of necessity has changed. In business word necessity means Mobile phones. Yes, I am talking about telecom sector.
Telecommunication Sector in Pakistan is not as vintage as it is in USA and the European Union. Mobilink and Ufone were the only two GSM operators in 2002 and they enjoyed a fair amount of time until the period which started in 2005 and is known as the boom period in Telecom Pakistan.
The telecom sector in Pakistan is a major source of revenue generation for the government and the investors. Since 2002 there has been an upward Trent in this sector mostly because of government’s plan of deregulization and privatization. When the new players namely Telenor and Warid came into the market they came with a big bang. They not only increased their share but also made this market an eye catching investment point. Telecom industry got a boost because of value added services, Voice mails, MMS services. Low SMS and call rates suggested that it was the cheapest market rate not only in sub continent but in most of Middle East.
Pakistan has achieved so much in the field of telecommunication then many of its neighboring countries. Coverage of cellular mobile services has reached almost all the corners of Pakistan, connecting most of the population in rural and urban areas.
The above picture is a transparent review of what Telecom sector has achieved in the last 10 years. But if you ask me today then I would certainly not believe this Trent, The economic survey of Pakistan 2011-12 suggests that, total investments in the telecom sector was $1,137.5 million in the financial year 09-10 and in 2010-11 it was $495.8 million. From these figures we can conclude that the investment has fallen to a large amount, mainly because of political instability and that is why the investors are not willing to invest their money.
Let’s play a lot more with numbers; The Foreign Direct Investment in Telecom industry was $370 million in 2010, which was reduced to only $ 79 million in 2011. The FDI was 17{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} of total FDI in Pakistan and it became 5{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} in 2011. Apart from that, the revenues generated by Telecom Pakistan in 2010 were $340 million compared to $360 million in 2011. Since there is increase in terms of revenue, so the telecom industry is a contributor of more than Rs 110 billion in taxes to the national exchequer, which is the highest to date.
The above all was achieved using a 2G network. Now the time is gone for 2G network or 2.75G network to be specific. The market which started as boom in 2005 is in yellow portion as the picture shows. 2012 saw nothing new but revenue generation and this trend can go on for the next 2 to three years but the consumers want something from the mobile companies. If the government doesn’t react then I fear that the industry for telecom would suffer the way CNG industry is suffering.
Given the trends, how can the government persuade foreign investors to invest in Pakistan? From where I see the only way is by auctioning of 3G and 4G licenses, for which telecom operators and investors have been waiting for over 3 years now. Unfortunately, the decision has not been made due to lack of political interest.
Sri Lanka was the First country to start 3G technology. The appreciation goes same for Nepal and India. This switch, in return has contributed to positive GDP growth with increasing mobile and internet penetration.
Pakistan is no doubt a huge market for mobile industry, as the population of Pakistan is growing at exponential rates. In the last 5 Years the rate of broadband subscribers has seen a tremendous growth. According to the Pakistan Telecommunication Authority, broadband penetration will reach 10 subscribers per 100 inhabitants by 2020, and the number of broadband users in Pakistan will touch 78 million.
The demands of sectors like health, education, agriculture, commerce can no longer be fulfilled by 2G networks. However, 3G technologies have the essential elements for advancing socio-economic development as it will enhance quality of life and provide economic opportunities both in public and private sectors.
The transition from 2G to 3G/4G technology will entail significant economic benefits for Pakistan. Experts in the telecom sector believe that increasing broadband penetration leads to economic gains: a 10{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} increase in broadband penetration contributes by a percentage in GDP growth, while around 80 new jobs are created for every 1,000 new broadband connections.
International Telecommunication Union stats show that almost 160 countries are using 3G technology. While the number of active mobile-broadband subscriptions has exceeded 1 billion users.
The good thing is that in Pakistan, The telecom sector has a well established 2G network, so it will have no difficulty in switching to 3G/4G technology; it is the need of time for Telecom Pakistan to join those 160 countries that have already adopted 3G/4G technologies and reach those places which have never been served. We cannot afford to delay the process anymore. Any further delay in auctioning of 3G/4G licenses will adversely impact this potential sector. The current national IT and telecom policies are scraped and the government must reframe a clear, multidimensional, stakeholder-friendly policy, and also provide an implementation roadmap that can cater for both short-term and long-term objectives.
The writer has recently done MBA in marketing (with major scope in brand management) from Bahria University, Islamabad. His book entitled “Brandization – through brand extension” has been published in Germany. He can be reached at  hanan.dahar@gmail.com.