BALOCHISTAN'S UNCERTAIN TELECOM FUTURE

SYED FAZL-E-HAIDER
(feedback@pgeconomist.com)
Apr 12 - 18, 2010

Balochistan has immense potential for the development of telecom sector and its geo-strategic location in the region is also an attraction for the foreign telecom firms. Less affordability and non-availability of electricity are the main impediments for development of this sector in the province. Other obstacles are its geography and demography indicating a difficult terrain and scattered population. The province still lacks the sound telecommunication infrastructure and remains a potential telecom market after the deregulation of telecom industry.

The province is yet to fully enjoy the fruits of deregulation, which has brought scores of new private entrants to provide service in Pakistan. The deregulation of telecom industry is fast gaining momentum with dozens of more communication companies and millions of customers entering both the fixed-line and mobile telephone markets. The mobile network covers a population of 2.7 million which is around 35 per cent of total population of Balochistan. The fixed line subscribers are substituting fixed line with mobile services in the province. In 2006, the fixed line subscribers in the province have dropped by 5 per cent.

The former government had taken certain initiatives to enhance the telecom access as well as tele-density in the province. For instance, it had reduced the annual regulatory fee of Wireless Local Loop (WLL) licensees operating in the province from 0.5 per cent to 0.1 per cent for three years initially and 0.5 per cent to 0.25 per cent in subsequent two years. Annual Spectrum Fee for WLL was also reduced to 10 per cent of the actual fee applicable under the license. During the year 2006, the tele-density has increased in Balochistan from 5.6 per cent to 10.47 per cent, showing a growth of almost 87 per cent. According to an estimate, 4.5 million people out of a population of around 7.5 million have access to either mobile or wireless or fixed line networks. 30 Tehsils out of total 58 are covered with telecom services in the province.

Pakistan Telecommunication Company Limited (PTCL) covers 39 cities in Balochistan with a population of more than 1.5 million. The PTCL has laid Optical Fibre from Quetta to Chaman. Similarly, it has also completed the project of lying of Optical Fibre from Loralai to Dera Ghazi Khan. It is also committed to provision of 18,552 lines on copper and WLL services in far-flung areas of the province, placing of 2.5G system in Quetta, Optical Fibre Access Network at Quetta and Hub with 13,000 and 1000 lines respectively.

The province is still far behind, as compared to the rest of the country, which has witnessed a faster growth in tele-density during last three years. Though the sector is growing well in the provincial capital Quetta with new mobile connections every month, yet its penetration among the lowest strata of society, especially in rural Balochistan, is much less than the Quetta city.

The deregulation of telecom industry is fast gaining momentum with dozens of more communication companies and millions of customers entering both the fixed-line and mobile telephone markets. The sector is currently contributing 2 per cent in GDP directly and indirect contribution in other sectors of the economy takes this share to about 5 per cent. Telecom companies have invested over $8 billion during the last four years in Pakistan particularly the mobile sector whose investment share accounts for 73 per cent. In 2006-07, cellular mobile sector has invested over $2.7 billion, which becomes about 66 per cent of total investment by the sector.

The government should take Balochistan's telecom future seriously and announce a special telecom policy for the rapid growth of this industry in the province. It should also take steps to improve the security environment in tribal areas of the province, so that private firms could expand their operations in these areas. The level of development in telecommunication is generally measured through tele-density; hence the PTA should take steps to enhance tele-density in the province. Steps should be taken to establish community-based tele-centers across Balochistan, where telecom facilities will be shared.

The government needs to play a role of facilitator in growth of cellular telephony in Balochistan. It should facilitate more operators to start with their operations and extend incentives to the telecom industry in the province. What is needed on the part of government is the development of reliable and sound telecommunications infrastructure in the province. It must take steps to lay fibre optic in all the districts, so that the mobile telephone firms could complete their coverage plans in far-flung areas and the people of rural Balochistan could also enjoy the services and franchise being provided by these firms in Quetta or other cities of Pakistan.

Taking advantage of its geo-strategic position, Balochistan can be developed as a hub of activity for international and local telecom companies. There is a need to prepare a well thought telecom policy, after intensive discussions and debates involving all stakeholders. The mobile telephony market in the province should be characterized by a tremendous consumer demand, high levels of competition and a government that would be ready to welcome inward investment. The government should set an annual target for the mobile penetration in province and efforts should be directed to achieve that target by the end of the fiscal year.

A telecom forum should be arranged as a calendar activity by the PTA to provide a platform for promoting interaction among telecom consumers, private sector and telecom regulator for telecom development and for devising a strategic approach for development of telecom services in the province.

Today, law and order has become a major problem in the province. It provides a risky environment to implement any business plan or economic activity. The incidents of bomb blasts, attacks on public installations and target killings have become a routine. The prevailing security situation in the province is enough to discourage the foreign firms to start their operations.

The government should work for creating a peaceful and business-friendly environment in the province. The investments in telecom sector can only be attracted if the province presents a stable political scene. The government should make efforts for bringing a political reconciliation in the province and improving the law and order situation, which is essential for luring the foreign investors.