3G AUCTION: NEED OF CAUTION
IT LED TO A LOT OF MUDSLINGING IN INDIA.
SHABBIR H. KAZMI
Mar 19 - 25, 2012
It appears that Pakistan Telecommunication Authority (PTA) has delayed the auction of 3G licenses. Lately, it has placed an advertisement requesting the consultancy firm of international repute to offer services for the auction of 3G license. Interestingly the last date for submitting Expression of Interest (EOI) for consultancy services is March 26, just three days ahead of scheduled 3G auction date of March 29th 2012.
PTA was under heavy criticism from opposition senators on modalities of 3G auction. The Standing Committee on Telecom and IT of Senate asked PTA to make amendments in 3G auction policy. There seems to be a difference of opinion among the policy makers over auctioning of 3G licenses scheduled before end of the month. The committee criticized PTA for using the term 3G/4G/ LTE and technology neutral licensing for the upcoming auction of spectrum in Pakistan and asked the PTA Chairman as to why he is favoring PTCL. The chairman of the committee, Senator Muhammad Idrees Khan, commented that it seems the whole process of auctioning spectrum is designed for one single organization in mind.
Committee also criticized privatization of PTCL and asked PTA to explain reasons for its inability to recover the outstanding installment of $800 million from Etisalat. It seems that the agreement between PTCL management and government of Pakistan became the cause of delay in auctioning of 3G licenses initially scheduled for 2006. Details reveal that the committee was bias towards PTCL as it stopped PTA to cater any request from any investor who is already a defaulter. It looks almost certain that unless PTCL pay the outstanding $800 million, it cannot participate in the bidding process being initiated by its subsidiary Ufone.
Though one hates to say but still can't resist from saying that 3G auction has also become victim of rivalry of Pakistan's two leading parties.
The PML (N) represented by Senator Prevaiz Rashid does not want the entire licensing to be conducted during the tenure of PPP, as this will always give PPP a credit for introducing 3G in Pakistan. It seems he personally wants to split the process into two phases so that the later part could be auctioned during PML-N tenure, as it is confident to get power after the next election.
During a meeting of the Senate Standing Committee chaired by Senator Shahid Hassan Bugti, it also transpired that the auction for 3G licensing might be delayed till June 2012 if the government does not relax Public Procurement Regulatory Authority (PPRA) rule for the auction. One is completely amused at the logic being followed by Dr. Muhammad Yaseen, Chairman PTA that 3G auction is need of the hour and therefore the government should waive off PPRA rule for execution of the transaction at the earliest. This desperation is because of the erosion of country's foreign exchange reserves. It may also be said that there are some groups having vested interest who are keen in getting the license come what may.
The 3G is a very fast internet through mobile phones. Currently, mobile companies in Pakistan use 2G spectrum, though the world has moved to 4G.
According to the sector experts, Pakistan can expect around one billion dollars from 3G action, which is paltry when compared with India. The 3G auction had yielded $15 billion to India in April 2010. Therefore, some of the experts say that Pakistan must fetch minimum $4 billion, if the auction is done in a very professional and transparent manner.
In India, in addition to fetching $15 billion in foreign exchange, an equivalent amount was also received as foreign direct investments creating a spree of jobs for not only the highly educated but also for the less educated skilled hands. Pakistan has surpassed figure of 100 million subscribers of cell phones, which is far from saturation as some of the developed countries having attained even higher level.
There are a few reasons for quantum growth of use of wireless technology in Pakistan, which include extremely low cost of hand sets, very low tariff and introduction of value added services by cellular companies. The topography of the country also makes wireless technology more efficient and cost effective. Added to this has been availability of computers at affordable cost and convergence of computer and telecommunication technologies.
One of the biggest evidence of this convergence is the branchless banking umbrella employing more than 20,000 agents, who have helped in channelizing 50 million financial transactions worth more than Rs190 billion. These agents/outlets/touch points are spread across several cities, towns, and smaller villages in Pakistan.
The average number of transactions a day through branchless banking is around 180,000 and the average size of a transaction comes to Rs3700. The total number of accounts opened now stands at over 800,000 while the number of bank branches at present is slightly over 10,000.