Mobile phones are the most common way to access the internet. According to the Pakistan Telecommunications Authority (PTA), mobile broadband subscribers account for 102 million of the country’s 104 million broadband connections. As a result, the focus of Digital Pakistan’s vision is on mobile broadband.
The spectrum is essential for cellular networks and new round of spectrum auctions has brought the telecom sector to the spotlight. Pakistan, on the other hand, has one of the smallest spectrums in the world. Pakistan has released the least spectrum in the region, significantly less than Afghanistan. It’s not as if the spectrum isn’t there.
The government owns a lot of unused spectrum that is just waiting to be release. There is no question that the present spectrum available is insufficient to fulfil the rapidly increasing demand for data. Allowing cellular carriers to purchase extra spectrum was the good decision made by the government and the PTA.
Relevant Read: GB, AJK Spectrum auction process completed, Minister
Both the policy directive and IM make an important point that should be highlighted. It’s an excellent idea to sell spectrum in 5 MHz chunks. It’s also worth noting that in the past, fractional spectrum allocation was corrected by issuing smaller 1800 MHz portions to make them multiples of 5 MHz.
This might have been done in 900 MHz as part of the renewal process instead of delaying it for another 15 years. PTA stated in the IM that it intends to work with all cellular operators to deliver mobile communication services across Pakistan, with the goal of reaching the largest possible population with high-quality voice and mobile internet services. These wonderful and desirable goals, however, do not correspond to the astronomically high spectrum base price.
Operators will be required to pay a 10% advance income tax with aggressive payment conditions and interest in addition to the base charge. In the 2014 auction, the previous government implemented these stringent payment terms with interest for the first time. If operators are allowed to earn and pay, as was done in the 2004 auction by enabling cellular operators to pay half of the auction money in 10 equal annual instalments with no interest, the auction results may be different.
The Pakistani telecom market is dominated by Jazz, owned by Veon Ltd of the Netherlands, Telenor Pakistan of Norway’s state-controlled Telenor, Zong of China Mobile, and Ufone of the state-owned Pakistan Telecommunication Company Ltd. Out of the four cellular providers, only Ufone, a PTCL subsidiary, participated in the bidding process. The operator has paid 20 percent of the sum (Rs9.38 billion) and will pay the remaining 50 percent in five equal annual instalments. Ufone won a total of 9MHz in the 1800MHz band during the auction, accounting for 70.3 percent of the available spectrum in this band.
As a result of this deal, Ufone’s spectrum holdings in the 1800MHz band will expand from 6MHz to 15MHz. One of two possibilities exists for a telecom business to repay its investment in getting a spectrum licence. The first is to increase their consumer base, while the second is to boost their rates. To attain the most significant policy aims, it was required to strike a balance between these two variables.
One of the most essential factors is spectrum pricing and its worth in local currency. I It’s strange that cellular carriers make money in their home currency but have to pay in dollars to have a local input/spectrum. The next step would very certainly be to ask for taxes in US currency.
Surprisingly, PTA will only offer reimbursements in local currency, not USD, according to IM.
This type of behaviour is only harmful to the economy and customers. In the 2014 auction, this method resulted in unsold spectrum, and only one cellular company was interested in 2016 and 2017, eager for spectrum. Former decision-makers, experts, and industry veterans have already expressed concern that the high base price, continued denomination of spectrum prices in US dollars rather than rupees, as well as unrealistic and complex licence conditions, may deter operators from participating in the auction, despite the clear need for more spectrum to meet digitalization and connectivity goals.
Climate change is also influenced by spectrum. Because there is less spectrum in use, the same spectrum must be re-used more frequently. This will need the construction of more radio base stations, which will result in increased energy consumption and greenhouse gas emissions into the atmosphere. We could require MNOs to use more spectrum with the fewest possible base stations in a country where the prime minister is a major advocate of green initiatives. As a result, no additional competitors will be accepted into the auction.
To provide expanded mobile phone and internet services to the people of Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (GB), the cabinet opted to hold a spectrum auction for the first time in these territories. To oversee the auction process, PTA hired internationally renowned experts Telconet and Frontier Economics. The latest spectrum auction will improve service for AJ&K and GB customers while also expanding the voice and data coverage footprint. It will have a positive impact on the tourism sectors of both provinces.