Anxious wait: Judgement day for the spectrum auction

Pakistan’s cellular subscribers keenly await 3G, 4G rollout.

KARACHI:

Since the appointment of its new leadership last September, Pakistan Telecommunication Authority has apparently done well on all fronts. However, the telecom regulator faces a real test when it carries out the much-awaited and oft-delayed auction of licences for next-generation mobile internet services on Wednesday (today).

With its digital economy at the brink of expansion, the country is all set for a technology boom to be driven by the rollout of third-generation (3G) and more advance 4G mobile technology. All eyes are, therefore, set on Wednesday (today)’s spectrum auction whereby the government will sell 3G and 4G licences to cellular service providers.

Since the auction process was terminated prematurely on three different occasions in the past, the event is seen by all segments of the society as a historical moment. The country’s cellular subscribers in particular have long been waiting to consume high-speed data services on their smart devices, while experts say country-wide rollout of 3G technology will bring unlimited benefits to the social sector-education and health in particular.

The results of the spectrum auction will be public shortly and will determine whether or not the auction is a success. But for PTA Chairman Dr Ismail Shah and his men this is a big test – after all this is the job PTA’s chief and his team were trusted with by the finance ministry.

In his budget speech for fiscal 2014, Finance Minister Ishaq Dar had set a target of $1.2 billion under non-tax revenues, which was supposed to be earned from the auction of 3G licences. Dar went one step further in January this year and said the government was expecting to raise $2 billion from the auction.

The auction’s results will prove whether Dar’s expectations are practical or optimistic but Dr Shah’s team already had some early success on April 14 in the form of sealed bids – the telecom regulator received more demand for spectrum than what it had put on sale.

While experts chose not to comment on how much the government could earn from selling these licences, the PTA is looking to raise at least $1.3 billion if it sells 50 mega hertz of spectrum for which the bidders have shown interest.

The PTA had put on sale 30MHz of spectrum in 3G [2100MHz] band and 20MHz of spectrum in 4G [1800MHz] band. The base prices for 3G and 4G licences have been set at $295 million per 10MHz and $210 million per 10MHz respectively.

While the finance ministry seems to have attached the auction’s success mainly to the monetary benefits, industry experts view the situation very differently.

The government’s expectations also include $291 million, the base price for 850MHz band that was reserved for a new operator, said an expert who wished not to be quoted. Since no new player had submitted sealed bids on April 14, this amount should be subtracted from what the government was targeting last year, he said.

“I think the success of the auction should not be seen in the context of amount alone,” the expert on information communication technology said. “We are finally able to roll out 3G services, which in itself is a big achievement,” he said – the country is already very late and lags behind rest of the world.

More than 160 countries have launched third-generation (3G) mobile services – now a decade-old technology – and the number of active 3G subscriptions surpassed one billion, according to experts.

By contrast, Islamabad has been trying to introduce 3G cellular services since 2006 but the government – particularly the former government of Pakistan Peoples Party – ran into controversies in every single attempt towards the spectrum auction.

With delays in 3G gaining nationwide criticism, it finally took the country’s top court intervention, which expedited the process and as a result the PTA is holding the auction today.

It will be a challenge for the PTA to ensure an early rollout of the technology and broader penetration while raising enough money to feed the cash-strapped economy at the same time. Experts, however, are satisfied with the way the PTA has handled the process so far.

“The process has been so open and transparent that no controversies took place this time around,” the expert said. “They are auctioning both 3G and 4G licences simultaneously. This will give us the now old 3G technology and set the stage for the rollout of more advance 4G services, which is a good move.”

Published in The Express Tribune, April 23^rd, 2014.

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