High-speed internet

Since the onset of the Covid-19 pandemic, there has been a surge in demand for high-speed internet for remote work and online learning. This has led to a sharp decline in the demand for cheaper but significantly slower 3G services. The latest statistics put out by the PTA reflect this. Overall mobile phone subscribers grew from 167.27 million in June 2020 to 168.04 million by the end of July 2020, or about 770,000 subscribers. The number of mobile broadband subscribers, however, grew from 81.14 million to 82.76 million in the same period, or 1.62 million users. But despite the relatively rapid growth, there remains a growth ceiling, because much of the country is still using basic devices. This is not because of an aversion to technology, but simple cost factors — despite cheap cell phone packages, the average Pakistani is priced out of even low-end smartphones because of the high duties and taxes tacked on by the government.

As much as the government may tout its Digital Pakistan Initiative and service providers expand broadband coverage, the ceiling on new users will remain until the crippling tax policies on cell phones and cellular packages remain. Commendable government initiatives such as supporting companies that expand into underserved areas will invariably fail to show the desired results if the underlying tax problem is not fixed. There is no point in setting up a 4G network in an area where no one can afford a 4G-capable phone. On the opposite end, the tax policy is also eating into profitability for companies. At the same time, Pakistan has one of the lowest rates of investment relative to revenue by telecom operators in the region. Providers could, in theory, go beyond their infrastructure investment and look at investment strategies that allow users to have increased access to smartphones, a solution that will serve companies and consumers well in the long run.

Published in The Express Tribune, August 30^th, 2020.

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