TELECOM GOING BEYOND CONNECTING PEOPLE

IT HAS BECOME SUCH AN INTEGRAL PART OF EVERYDAY LIFE THAT WE EVEN DO NOT BOTHER ABOUT WHAT KIND OF COMPLEX TECHNOLOGIES ARE USED TO SUPPORT THE SYSTEMS USED BY EVEN OTHERWISE ILLITERATE PEOPLE.

SHABBIR H. KAZMI
(feedback@pgeconomist.com)
Aug 22 - 28, 2011

Over the last one decade, Pakistan has gone through a complete transformation of telecommunication sector. Huge investment has been made in the sector and users have emerged the biggest beneficiary.

Not only that newer services are offered at very competitive costs, but in a bid to retain the subscribers many free services are offered.

There is an old saying 'nothing comes free' but in an attempt to make the best use of technology, operators are trying to increase customer traffic for recovering the initial cost before the technology becomes obsolete.

This could be best understood by referring to 2G technology. It has become virtually obsolete with the introduction of 3G technology. The ongoing investigation into the massive corruption in granting 3G licenses in India shows the level of lucrative business prospects.

In Pakistan, telecom market is seen fast moving towards saturation, but players are creating niche markets by offering value added services. The ultimate beneficiaries have emerged the subscribers due to declining tariffs and add-on services.

At times, in an attempt to attract more and more subscribers, service providers compromise on quality but apex regulator, Pakistan Telecommunication Authority (PTA), does not take action. One of its major achievements has been curbing the misuse of SIMs but still a lot more needs to be done.

One of the factors that brought radical changes in the telecommunication sector was the entry of China Mobile that announced to invest US$300 million in Pakistan during 2010. This was one of the largest investments by any telecom operator in the current years.

The company known in Pakistan by its brand name ZONG generated thousands of jobs directly and indirectly. China Mobile intends to invest more in the country as it has chalked out an elaborate investment plan.

China Mobile, which has made the largest investment among all Chinese investments in Pakistan, also has the distinction of being the only offshore company operating in Pakistan, which has invested more than US$700 million in foreign direct investment in a year.

ZONG is among the top three companies in terms of number of base stations. China Mobile's first venture outside China has attracted attention not only in the global cellular market but also with the international finance experts and investment houses.

The company continues to invest heavily in the construction of GSM networks, support systems and transmission facilities, and for the development of new technologies and new businesses.

China Mobile pursues continuous innovation in the provision of services, business, technology, and management and sustained a leadership position in the telecom industry.

The growth of telecommunication sector in Pakistan and its convergence with information technology has been done in such a delicate manner that most of the younger generation even refuses to accept the days when 'Second Word War Style' telegraph sending technology was used; a letter from this part of the world used to take months to reach Europe and the United States of America.

Development of microprocessors, satellite-based communication, and growing use of wireless technology has changed our life style.

The development of new technologies is driven by the quest to achieve edge over the competitors. However, a change in the mindset that yesterday's competitors complement each other has helped in achieving new milestones and that too at a much faster speed.

According to a report, the numbers of cellular connections are approaching 108 million, remember Pakistan's total population is estimated around 200 million. It is true that people at an average have more than one SIM but a little closer look shows that cobblers, janitors, roadside vendors of vegetables and fruits, rickshaw and taxi drivers carry cell phones.

The lowest cost text messaging service offered by all the cell phone marketing has also made sending SMS in bulk the lowest cost option to maximum number of friend, existing and potential customers.

It may not be wrong to say that the highest level of convergence of IT and telecom has been achieved in the banking sector.

Though many Pakistanis have been familiar with online banking, ATMs and virtual banking, the latest milestone was achieved with the introduction of money transfer service offering a secure, easy and convenient way of sending and receiving domestic remittances through easypaisa retail outlets.

When the service was introduced, users had the convenience to access the service from more than 4,000 easypaisa merchants, with a plan to increase the number to 20,000 by the end of year 2010. Domestic transfer of money plays a key role in providing financial access to the rural population. "Remittance flow plays a valuable role in supporting the economy.

It also offers significant potential to support income of poor and vulnerable groups. Remittances are often the first and sometimes the only financial service used in low income households. Hence, the potential for an accessible banking agent in remote areas of the country is immense.

This realization led to Telenor Pakistan acquiring substantial stake in Tameer Microfinance Bank to promote its mobile based banking services. Telenor acquired 51 per cent shares in Tameer Microfinance Bank bringing foreign direct investment (FDI) of US$12.5 million equivalent to around one billion rupees.

Tameer is a microfinance bank licensed by State Bank of Pakistan in August 2005. At the time, this transaction was concluded, Tameer had a network of 27 online branches and 23 sales and service centers across Sindh and Punjab.

"The acquisition of 51 per cent of the shares in Tameer Microfinance Bank is part of our strategy to offer financial services in Pakistan," said Jon Eddy Abdullah, CEO of Telenor Pakistan.

At the launch of money transfer, Eddy Abdullah said, "Providing money transfer service is the next step in the development of easypaisa as a unique branchless banking solution. The World Bank estimates the domestic transfer volume in Pakistan at $6.95 billion per year. Through this service we not only aim to target all current users of domestic remittance services but also to help bring significant portion of billions of rupees transacted through informal channels."

Tameer's original branchless banking pilot was developed in partnership with the technology program at Consultative Group to Assist the Poor (CGAP), a microfinance center housed at the World Bank. The Bill & Melinda Gates Foundation support the program.