Pakistan reels from a low telephone density way below
the average in the region. The fixed-line teledensity in the country is
2.6 per cent which is much lower than 8.6 per cent in the Asia Pacific.
There are around 3.5 million fixed telephone lines in a population of
over 140 million.
Bad as it is, the low telephone penetration has
resulted in increasing demand for mobile telephone in the country the
numbers of whose users have registered an exponential growth since 2000,
But the number of mobile phone users in the country has registered over
five-fold increase from just over 300,000 since 2000 to around 1.8
million at present. The introduction of CPP (Calling Party Pays) by the
Pakistan Telecommunication Authority (PTA) has served as a catalyst for
the growth of mobile phone in the country. The most visible impact is
that first-time users makeup over half of the total subscribers of Ufone,
(one of the four mobile companies operating in the country which entered
the market in 2001).
Besides the CPP, the growing competition forcing the
mobile operators to offer low priced packages also played an important
role to fuel the demand for the mobile phones. Today the four mobile
operators are trying to attract the potential subscribers by offering
free outgoing calls during the non-peak hours and pre-paid cards which
remain valid to receive incoming calls even if expired.
The average cost of using the mobile phones has thus
been reduced significantly. The installation charges have been reduced
and pre-paid cards have abolished the security deposit requirement by
the operators. In addition, there has been an overall reduction in
tariffs depending on the kind of package one choose to buy. Getting a
mobile connection has become a much easier and less costly process.
The telecommunication sector of Pakistan is in the
process of transition. Though the planned privatization of the Pakistan
Telecommunication Company Limited has not fallen through its
deregulation is in the process. According to the Minister for State and
Information Technology, Muhammad Raza Hayat Hiraj the telecom
deregulation policy will be implemented in next three months. One of the
major beneficiary of the deregulation will be the mobile phone as the
government intends to offer at least two new cellular licenses. The
fixed-line telephone, both local calls as well as long distance and
internationals network, will also be deregulated and it is proposed to
grant 3 new nation-wide licenses for Long Distance and International
fixed line telecommunications and up to three new local loop fixed line
telecommunications licenses per PTCL region.
The low teledensity and penetration of phones —
both fixed-line and cellular — in Pakistan should better be viewed in
the context of its telecommunication infrastructure which is
nevertheless large. The fact that the country reels from low telephone
penetration highlights the immense potential that the sector offers to
the private sector investment. The deregulation of the sector, thus, is
seen by many as a great opportunity to attract mega dollars in the
telecommunication sector. The minister for state said that 'the
government was expecting a minimum of $ 15 billion." He also
dispelled the impression that the entry of new telecom operators would
adversely affect the PTCL's revenues saying that the state-owned company
would still be enjoy the bulk of the business. The PTCL earned a net
profit of over Rs 19 billion in 2001-02 compared to Rs 18 billion in
2000-01. PTCL's total gross revenue totaled about Rs 67 billion of which
over Rs 47 billion came from the domestic market while the remaining Rs
19.5 billion came from the overseas. Corporate customers contributed
nearly 70 per cent to the PTCL's revenue last year while the remaining
30% came from the general public.
If the past trends are any indication, the entrance
of two new cellular operators in the near future will further heat up
the competition the benefits of which would be filtered down to the
subscribers. The introduction of the CPP regime and the entry of the new
operator, the Ufone, a fully owned subsidiary of the PTCL, two years ago
served as a catalyst for the growth of mobile phone use and the entrance
of new operators is expected to once again heat up the competition
resulting in substantial increase in the mobile phone users in the
The telecommunication sector in Pakistan has
registered a robust growth in last two years in general and last one
year in particular. The present government is giving the
telecommunication the attention which it deserves and the entry of new
cellular and fixed-line as planned would help improve the overall
quality of service. In addition, the emergence of increased competition
in the cellular sector and in the fixed-line telephone for the first
time would result in greater value-added services in next few years.
Most of all the deregulation will help attract fresh
private investment in the telecom sector, particularly the foreign joint
ventures, would help facilitate induction of cutting-edge technology.
The public-private partnership would also help improve efficiency and
expertise. The deregulation will in no way diminish the role of the PTCL
as the most dominant telecommunication carrier in the country as it has
a fairly extensive network in the major urban areas and has also worked
to improve rural communications as the only telecommunication system.
The deregulation of the PTCL in Pakistan will help
the local telecom industry attract private investment, both local and
foreign as well as joint ventures. It pumped a huge $ 1,445 billion in
the global economy two years ago. The revenue from telecom services and
equipment worldwide was expected to touch record $ 1,110 billion in
2001, $ 190 billion more than it was in 2000. Similarly, the sales of
telecom equipment worldwide was projected to increase from $ 290 billion
in 2000 to $ 335 billion in 2001.
The projected growth, however, failed to come in the
aftermath of 9/11 and the bankruptcy of global telecom giant WorldCom.
However, despite the setback the telecom sector is expected to grow in
the years to come, particularly in countries like Pakistan reeling from
low teledensity and growing demand to get, and remain, connected. The
affect of the contemporary wired world is having a spillover affect on
As mentioned earlier the mobile phone has depicted
the greatest growth trend in the telecom sector of Pakistan. Though the
base of mobile phone still remains low in terms of the ratio of
population, what is evident is that it has increased at a much faster
pace than the fixed-line telephone population in the country. The
growing demand for mobile phone in the country is primarily fueled by
the convenience and easy access, it is associated with and also on the
overall cost of using it in last two years.
In addition, the mobile phone should be viewed as one
of the primary enabler of creating an IT culture in the country. Mobile
phones today are no more mere voice carrying devices but are being used
increasingly as data carrier, Internet tool, etc., etc. mobile phones
are used today to send and receive data, picture, information, net
surfing, etc. The increased used of mobile phones, thus, translates into
increasing the share of Information Communication Technologies (ICTs)
which is part of the services sector.
As is, the share of the ICTs in the service sector in
the GDP of Pakistan remains a low 3.5 per cent. Pakistan, thus, has
failed to benefit from the ICTs to give a needed boost to increase the
share of services sector in the GDP. This is all the more important as
compared to many other sectors, the ICTs is a less capital intensive
sector and its primary raw material is the human resources, which we
have in abundance here in Pakistan. The ICTs have helped pushed the
share of services sector in almost all developed economies of the world.
For instance, services sector is contributing around 80 per cent to the
GDP of the USA, a good 30 per cent of which is coming from the ICTs.
The ICTs can play a similar role to increase the
share of the services sector in the GDP here in Pakistan as well. A one
per cent increase in the ICT means between $ 1-5 billion increase in the
GDP. However, access to reliable, dependent and inexpensive voice and
data infrastructure is a must to help achieve this goal.
True that the share of ICTs in the services sector in
the GDP would happen overnight — it would and come with time provided
the policy makers and the entrepreneurs start realizing its importance.
Investing in services and ICT sector is thus imperative to help boost
the Pakistani economy as they need less capital investment and more
human investment, which we have in abundance here. Dependable, reliable
and inexpensive telephone access, both fixed-line and digital, is thus
important to usher a real IT revolution in the country.
Just as the IT is an enabler, the telecommunication
is enabler's enabler. This is so as without a reliable, dependable and
state-of-the-art telecommunication infrastructure the services and the
ICT sector would fail to improve their share in the GDP. The low
telephone penetration is the major hindrance but this apparent weakness
can our very strength for attracting the investment required to induct
latest telecom technology to offer the needed value-added services. The
proposed induction of the two private cellular phone as well as the
fixed-line operators in the months to come shows the keen interest of
the private sector investors to reap the benefits that only a virgin
market like Pakistan can offer. Deregulation differs from privatization
in many ways — privatization means transfer of entire PTCL
infrastructure, administration and services of the PTCL, deregulation
will allow the private sector get involved in many projects which though
heavily capital intensive allow fair returns.
Increased used of mobile telephone is also an
indicator of how well connected certain country of society is. It is
also a barometer of the strength of a national economy, particularly the
potential for the trade, financial and economic activities within a
country. The flow of voice and data traffic is also seen by many as a
barometer of a how strong a national economy is.
As stated earlier, the latest mobile phones are not a
mere voice communicator but are built to send or receive data anywhere
in the world. The latest generation of mobile phones are no more mobile
phones they are built to perform the services of a hand-held lap-top on
the go. One can now send or receive a message, surf the web, chat on
line, order merchandise from a location across the globe, make and seal
a business deal in matter of seconds. In bits and pieces the latest
mobile technologies have started filtering down their benefits to the
subscribers in Pakistan who can now send a message anywhere in the world
and on a limited scale the use of Internet through mobile is also taking
However, much remains to be done to remain on top of
these developments taking place in the developed world so that we can at
least benefit from the latest technologies at least in part. The PTCL's
infrastructure still much remains geared towards voice to meet the
growing flow of data traffic. World standard show that 70 per cent of
the revenues of the telecom companies in the developed world is coming
from voice — only services while the remaining 30 per cent is coming
from the data-related services. In PTCL's case, however, less than 5 per
cent of the revenue is coming from the data service while the rest is
coming from voice services, about one-third from international calls and
two-third from domestic calls, voice and traffic.
The share of data services in PTCL's revenue thus
remains much below the globally accepted standard and even increased
internet and mobile contribute a megligible share in the overall
earnings of the PTCL. Without offering the value-added data services the
PTCL's revenue would keep coming from the voice-related services instead
of data-related services which offer greater potential of earnings for
the company. It is thus imperative for the PTCL to make the required
changes in the infrastructure to meet growing demand for data-related
services. The planned deregulation of the PTCL should look at creation,
a separate set-up to provide reliable and efficient data collection,
storage and transfer services. With the induction of private sector the
creation of a separate data department in the PTCL should now be taken
over by the private sector. This help PTCL to increase its revenue
bringing it at par with the global standards to supplement its income
from data service.
Just imagine how the availability of a dependable,
reliable, inexpensive and value-added data services would benefit the
economy by turning mobile phones into hand-held PCs surfing the net in
search of business, trade, opportunities and pleasure. While much has
changed much still remains to be changed to exploit the benefits of the
creation of real IT culture in the country.
The economic realities of a developing economy like
Pakistan make it imperative to follow the model of 'shared resources.'
This is particularly true as Pakistan reels from a low per capita income
of around $ 450. The low per capita income in turn has resulted in low
Purchasing Power Parity (PPP). To better understand the affect of PPP
let's highlight the example of the US where average retail internet rate
per month is $ 20, and that too for unlimited access, and the per capita
income is $ 20,000. On the other hand, users in Pakistan are paying
highly un-proportionate internet prices compared to the per capita
Without lowering the telecommunication tariffs — be
it monthly line rent on fixed-phone, local, domestic or international
calls, mobile phone, internet, etc., the economic realities and the low
per capita income would keep depriving the mainstream population to make
use of these and other services.
Pakistan has put its very own satellite (PAKSAT) into
orbit recently. The satellite is in would serve strategic and commercial
interests of Pakistan and would be capable of providing a wide range of
basic and advanced communications and broadcasting services.
It is time for the PTCL to invest in data services
system which thus far remains primarily voice-based to be better in tune
with the changing demands and too for its own good. Telecom operators
worldwide have created a separate entity to better meet the growing
demand for data services in addition to the traditional voice-base
business, the PTCL too should no more remains indifferent to the growing
demand for data service and the immense revenue potential that it
The mobile phones would revolutionalise the way we do
business here in Pakistan, like they have already done in the developed
world. They have, and will, replace the traditional ways of doing
business bringing any and all inherent advantages.
The revamping of the PTCL should be seen as a
beginning to usher in a new era of increased data flow to be in tune
with the global trends that show revenues of the telecommunications
operators from voice service is on a decline while the revenues from
data service is on the rise.
Trends also show that subsidiaries of many a national
telecommunication collaborate with experienced carriers to share the
knowledge to facilitate the transfer of technology. This in turn has
helped them in updating their infrastructure to offer quality services
to their customers to fuel the growth of ICTs. PTCL should also benefit
from these global experiences.
The sharp growth in the number of mobile phone users
during last two years, including 100 per cent increase alone last year,
highlights the potential that this particular sector of the telecom
offers. What makes telecommunication system all the more important is
that it is not only essential for promoting economic, trade, commercial
and information exchanges but is also imperative to foster national
integration as well as increasing regional and global trade.
In the wired world of today the importance of mobile
phone can hardly be over-emphasised. The convenience of getting
connected to the world- close and far- offer immense benefits; social,
business or otherwise, has turned the world into a real global village
where distance no more matters. The rising demand of mobile phones in
the country and the deregulation of the telecom sector should be
expected to fuel economic growth offering many intangible benefits for
The easy access to communicate and send and receive
data through the mobile phones will require a modern telecom
infrastructure to facilitate the growing traffic. The planned
deregulation of the PTCL and the emerging public-private partnerships
would help induct latest technology to offer more value-added services
to the communication hungry people of Pakistan. We will have to wait for
the heating up of competition in the mobile phones to further lower the
prices to better reflect the Purchasing Power Parity in Pakistan.