How much for a 3G connection?

Multiple factors to determine what companies would charge their customers.

KARACHI:

With the spectrum auction right around the corner, a majority of consumers are trying to seek the answer to an obvious question: what will the price for a 3G [third-generation] mobile service be and will it be affordable for low-end consumers?

Unfortunately, there is no simple answer to this. There are too many variables involved in determining the price of a 3G connection.



“Without much clarity regarding the final price of the spectrum auction, it will not be possible to forecast or speculate on tariff or its affordability for the consumers,” Telenor Pakistan’s Chief Marketing Officer Irfan Wahab Khan said.

The price of a 3G service will largely depend upon the spectrum cost, which is the price operators will be paying to acquire a single 3G licence, say market sources. The costlier the licence becomes, the more expensive will be the service.

The licence fee is not a fixed cost. Though the government has set the base price for a 3G licence at $295 million, the actual cost could be much higher depending on the competition among the bidders – at least four operators are in the race for three licences in the 1900-2100 mega hertz (MHz) band, the most suitable band for 3G technology.

It will be too early to predict the affordability of a 3G connection at the moment but market dynamics will certainly shape the price of the high-speed mobile internet service.

Who will be the first operator to launch the service and at what price, and who acquires the licence are other factors that will influence the price.

For example, if Zong – that plays on a low-price, high-volume business model – gets a 3G licence, it will mostly likely push the tariffs downwards, analyst say. Likewise, Ufone is another operator that plays on both price and the brand.

The cut-throat competition between these two operators, who mainly cater to low-end customers, had kept the country’s cellular tariffs from rising – the average revenue per user (ARPU) in Pakistan was Rs211 or $2.1 (in today’s exchange rates) in fiscal 2013, which is one of the lowest in the world.



Simply put, the telecom sector will remain hyper-competitive if Zong and Ufone are able to win a licence thus pushing 3G tariffs down. On the contrary, Mobilink and Telenor like to play on brand and high-value customers, which will keep pushing the tariffs upward. Word on the street is that all these operators want one 3G licence.

Regardless who wins the licence, the offerings will be more or less the same – that is the services will most likely be offered in bundles.

“With the launch of 3G, economically viable solutions will be designed keeping in view the needs of customers falling under different social-economic classes,” Mobilink’s Director Corporate Communication and Corporate Social Responsibility Omar Manzur said. The technology would not be restricted to any segment but would be available to both pre- and post-paid subscribers, Manzur added.

Published in The Express Tribune, March 24^th, 2014.

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