Telecom Pakistan: To Go 3G or Not?

Posted on May 3, 2010
Filed Under >Babar Bhatti, Economy & Development, Science and Technology
17 Comments
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Babar Bhatti

At ATP we have talked about the phenomenal growth of telecommunication industry in Pakistan. After many years of investment and growth, the telecommunication industry is facing economic challenges, price wars and flat revenues. With nearly 100 million subscribers, some think that the market may be close to saturation. Others argue that the country offers a lot more potential for information and telecommunication services – only if we could find the next killer application.

Today, most of the telecom revenue comes from voice and to a small extent from value added services such as SMS and ringtone. Other data services such as mobile financial services, mobile web browsing, mobile social networking etc (also known as Mobile 2.0) have not become popular in Pakistan and in other developing countries. Compare that with the rapid adoption of applications in US and EU on smart phones such as iPhone and BlackBerry and how that results in productivity, higher revenues and innovation.

Analysts agree that unless the conditions are right, consumers will not use the data services. Factors which impact the adoption of such services include: availability of high speed wireless networks, monthly cost, and availability of compatible handsets at affordable prices, availability of useful and interesting applications and content (preferably in local languages), literacy and awareness.

One of the discussion points from above is the lack of 3G network in Pakistan. In simple terms, 3G is a network technology which allows for high speed wireless data services. It requires a certain frequency spectrum, which is managed by Pakistan Telecom Authority (PTA). It is usual for mobile companies to bid for the right to use the spectrum. The decision to offer 3G spectrum for auction rests with the Ministry of IT and Telecom, Pakistan (MoITT).

The dilemma is that 3G services come with a high infrastructure and spectrum acquisition cost. The mobile telecom companies in Pakistan contend that there are very few potential customers for this new technology and most of them are concentrated in a few large urban cities.

This point came up at a recent telecom conference in Lahore where stakeholders from industry, government and public presented their point of views. It was clear from the discussion that 3G has less to do with technology, more with adoption. The killer application for 3G is mobile broadband. Mobile broadband ARPU may not decline as much as voice ARPU. The challenge is that cost of accessing the data services has to be decreased, especially in a country like Pakistan where most of the consumers are price sensitive.

PTA Chair Dr Mohammad Yaseen was present in the conference and he emphasized that more action needs to be taken by the industry to support local mobile applications, products and content. It was pointed out by a panelist that much of the Internet traffic in Pakistan is for content and sites outside Pakistan. Apparently YouTube is one of the most popular sites in Pakistan. The summary of the event was that mobile companies just don’t see enough opportunity of payback on 3G – as of yet.

However, there are a number of improvements which are possible with the existing 2G networks. EasyPaisa is one of the examples where it solves a huge problem for a large section of the population. Telenor plans to offer advanced services including In the coming months expect more of such services from other telecom companies and allows The mobile apps which are being developed in Pakistan have good potential for both the local and international market. There’s also the need to support Urdu and other local languages which has been ignored till now.

Babar Bahtti blogs at State of Telecom Industry in Pakistan, where this first appeared.

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17 responses to “Telecom Pakistan: To Go 3G or Not?”

  1. Adeem says:

    in india telecommunication is very very expensive also in arabs world its expensive but in pakistan its like a free thing and as far as i know in pakistanis are better in using technologies rather then india.

    personel exp with indians

  2. Tarique says:

    When is pak going to adopt 3G???
    I think there is awareness in peoples about 3G and i’m damn sure people will pay for this technology if it is adopted by mobile companies.

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