Broadband demand to grow with auction of 3G and 4G licences

Published: July 7, 2013

Besides investment, industry experts say, the introduction of high-speed mobile internet is expected to increase the growth of internet economy. DESIGN: ALI DARAB

KARACHI: 

A 10% growth in broadband penetration leads to a 1.3% growth in gross domestic product of a developing country, according to a World Bank study. IT experts often quote this study to make their case for broadband penetration but it is about time Pakistan can prove if the study is accurate. The country, as announced by Minister of State for IT and Telecom Anusha Rahman, is rolling out third generation (3G), or even advanced 4G, mobile spectrum technology this year.

With a cellular subscriber base of over 122 million, Pakistan’s mobile penetration is reaching close to 70% – this also includes multiple SIM users. The country has 30 million internet subscriptions, of which 50% access the internet through their mobile phones, according to Ansr.io, a mobile survey blog.

These figures, along with other statistics by Ansr.io, reflect a positive outlook for the country’s technology sector now heading for 3G and 4G.

The introduction of high-speed mobile internet, according to industry experts, will not only attract investment, but also boost internet penetration, increase smartphone usage and boost the growth of local IT content. In short, it will provide the spur for the growth of digital economy.

The government is expected to fetch somewhere between $800 million and $1 billion by auctioning 3G/4G mobile spectrum licences alone, a much-needed investment for the cash-starved economy. This will follow more investment in terms of infrastructure development.

Speaking to a group of journalists at the company’s headquarters in Oslo, Telenor Group’s CEO Jon Fredrik Baksaas said Pakistan can attract $5-10 billion in next five to eight years from the five telecom operators.

The Telenor Group itself pledged an investment of up to $1 billion in 3G licence and network upgrade over the next two years. Baksaas also said Pakistani market is mature enough for the demand for 3G services.

Besides investment, industry experts say, the introduction of high-speed mobile internet is expected to increase the growth of internet economy.

The 3G/4G technology will be an enabling factor for the growth of e-commerce and digital economy, said Afaque Ahmed, Member of Pakistan Software Houses Association for IT and IT-enabled services.

“The mobile internet penetration can increase manifold with the launch of high-speed mobile internet,” he said. At present, the mobile internet penetration is about 12%, according to the Pakistan Telecommunication Authority.

Explaining, Ahmed said many people do not use mobile internet mostly because of slow connectivity on GPRS mode while majority of those using mobile internet depend on Wi-Fi connectivity. This will change if there is high-speed internet, he said.

The telecom operators have invested heavily in infrastructure and are in a position to bring internet revolution in the country, Ahmed said. It is only a matter of time as mobile networks cover 92% of the geographical land of Pakistan.

He said the smartphone penetration will increase after the launch of 3G/4G technology – the smartphone penetration in the country is about 15%, according to industry sources.

Firstly, the demand for 3G-enabled mobile phones will increase. Secondly, the price of smartphones will decrease to as low as $50 (Rs5,000). “Today, you can buy a smartphone for Rs10,000,” he said.

While high-speed mobile internet will result in an increase in the usage of smartphones, the latter will create demand for local applications.

“Bandwidth price is going down, smartphones are becoming cheaper and then you have 3G coming. So the name of the game will be the local content,” Google’s country consultant Badar Khushnood told this correspondent during a conversation recently.

People have already tried basic internet, they know there is a lot of content available to consume for every class of consumers, Khushnood said, all they need is high-speed internet.

“The country is at a turning point as the real growth will come now,” Khushnood said while referring to the digital economy. “The country will leapfrog with 3G/4G technology just like it had by switching from CDMA to GSM,” he said.

Published in The Express Tribune, July 8th, 2013.

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Reader Comments (3)

  • haris
    Jul 8, 2013 - 10:43AM

    Good work ..Highly appreciate the step of Information Ministry in introducing 3G licences…what I would recommend is to build the infrastructure for 4g rather than 3g…. so that you can be at par with the rest of the world…. .Just like previously we jumped on GSM technology leaving behind CDMA.

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  • Lost
    Jul 8, 2013 - 12:08PM

    With increased TAXATION on prepaid mobile cards, and limited capacity for SIM sales, mobile operator CEOs would be idiots to invest in Pakistan. All bets are off and the business case for investment in 3G is ever so poor. Even if the auction takes place, it won’t raise more than a few hundred million USD, from all operators combined – far below than what it could’ve raised a few years ago, with less stringent regulations.

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  • PakPower
    Jul 8, 2013 - 1:18PM

    I really hope the information minister’s claim isn’t anything like Shahbaz Sharif’s claim of ending load-shedding within 6 months…

    @haris:
    4G phones are expensive, it won’t give any benefit if we move to it at this point in time. 3G is the way to go, at least for a start…

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