The telecom honeymoon in Pakistan which lasted about 5 years (2002-2007) allowed Pakistani consumers to leapfrog over older landline based infrastructure and get cheap and quick access to modern telecommunication technology. The investors, telecom businesses and Pakistani treasury - all made good money and it was a win-win situation. It seems that the golden period for Pakistan telecom is over. The spike in teledensity and corresponding load on the new infrastructure is causing a number of service issues. To add fuel to fire the telecom rates for calls to Pakistan and within Pakistan have started rising, causing a lot of concerns. Consider the following points from the last few months:
Deceptive advertisements by Mobile Companies
Rise in local call charges by PTCL
Calls to Pakistan made more expensive
PTCL forces Pakistan package on its customers
Customer service calls are not free any more
Telecom consumer protection laws still in draft
Other emerging cosumer gripes
Some people hold the view that given the tremendous progress made, complaining about telecom situation in Pakistan is not justified. Yes, there have been great advances made but if we do not fix the structural issues early on, we will lose much of that progress. Left unchecked we may even regress to a point where there’s plenty of competition but consumers end up without the services they deserve at a fair price. Broadband is an appropriate example. Pakistani public has been tormented with poor service and caps on the usage.
I believe that with the right regulatory measures, consumer protection laws and a code of ethics we can keep the telecom sector on the right track.
Good post. Yes, the honeymoon is over, because it was just a honeymoon.
I do think that this is just about consolidation mostly. However, you are right some of the structural issues also need to be resolved.
But I really think that there are also too many companies in Pakistan. The market is just not that large. So, some of them will have to fall off or get merged because the market is probably likely to keep only about 3 or so, the others will just disappear and then we will have more stability in price as well as service.
I agree with Eidee Man, even with the changes you mention, telecommunication costs in Pakistan remain amongst the cheapest in the world. Maybe even too cheap because of the fierce competition between providers.
Also, deceptive advertising is a worldwide problem. Look no further than the housing crisis in the U.S.; even with a 99% literacy rate, people STILL signed up for loans they could not afford…simply because a lot of them just didn’t fully grasp what they were committing to!
Regardless, the Pakistani market for consumer telecommunications remains excellent when you compare it to highly developed infrastructures and “free-markets” like the U.S. I pay an absurd amount for cell phone service that I barely use; you basically cannot buy a plan for less than $30 a month…and by the time they finish taxing you and charging fees for this and that, it comes around to more like $38 per month.
Also, “texting” is not nearly as popular amongst 22+ adults in the U.S. as it is in Pakistan (the last time I sent a text message in the U.S. was probably a year ago). Texting is needlessly expensive–usually around 10 cents per message sent or received…T-mobile even charges me for the stupid spam they send me every now and then!! Don’t even ask about the mess one has to deal with when buying a simple handset.
As far as rates are concerned, I bet they’re going up because the market is starting to stabilize; it’s perhaps surprising that most telecoms are actually not profitable. So I wouldn’t be surprised if India sees the same increases as well, as soon as the acquisition and merger hype starts to cool and businesses actually start thinking about earning money.
Just look at Sprint….despite its astronomical charges..it’s still not profitable.
It amazes me that your call rates are going up, because here in India we enjoy the lowest call rates anywhere in the world and it looks like they’re only going down further!
I agree that the “honeymoon” was unnatural and the costs had actually come down so much that companies could not just survive this way. So as you move away from the cut throat competition the prices will have to stabilize at a more reasonable place. The costs are still VERY low in Pakistan compared to international standards I think.
I think the market is now getting saturated so we will see some of the good offers disappearing
In some ways things had become TOO GOOD for consumers and artificially cheap
I can not agree/disagree with the premise that the honey moon is over due to lack of information. I hope it is something the Telecom Industry anticipated and is ready to overcome the challenge associated to growth and maturity.
When I was in Pakistan - 2006 and tried to see if I can work from Pakistan just as my Indian buddies.
Found out the cost of getting 1MB (uplin/downlink) was 2.5 lakh. One line was shared by many. Now I hear that with recent PTCL fiber optic network installation in many of the cities (unfortunately not all), the cost has dramatically declined. Now you can get 128KB (which is decent if you wanted to work from Pakistan).
I remember paying for a crapy service for 12000 ruppees which provided me the same or little better service then 56kb provided.
I hope Pakistani Telecom Industry leadership can overcome this issue.
Thanks for the post.