Classes to take from spectrum public sale


Anybody, who had something to do with the telecom sector, didn’t count on your entire supplied spectrum to get offered within the newest spectrum public sale. However nobody thought that just one out of 4 potential bidders would bid, for not even one-third of the supplied spectrum.

Want of spectrum

Connectivity (ie: telecom) is the primary pillar of Digital Pakistan. However regardless of which international ICT index you have a look at, our telecom sector is lagging behind all our neighbours (besides Afghanistan). One doesn’t want any proof of that. As shoppers everyone knows that the standard and velocity of the broadband web is sort of pathetic – besides in some prosperous areas of massive cities. Through the pandemic, college students have been discovering it exhausting to check on-line, information staff couldn’t earn a living from home, our enormous freelancing export potential stays largely unexploited, and so forth.

Like virtually all of the growing nations, the first entry to web for us Pakistanis is thru cell. As per the Pakistan Telecommunication Authority (PTA), out of 104 million broadband subscriptions within the nation, 102 million are cell. That’s the reason the dream of Digital Pakistan rests on cell broadband. And since cell depends solely on spectrum, the spectrum assumes nice significance.

Nonetheless, Pakistan is without doubt one of the most spectrum disadvantaged nations on the earth. The whole quantity of spectrum launched in Pakistan is the bottom within the area –even lower than Afghanistan. Not that spectrum is unavailable. An enormous quantity of unused spectrum is mendacity there with the federal government, able to be launched. Unused spectrum loses its financial potential each passing day.

Then why?

So why did many of the supplied spectrum not get offered final week?

For that we must return to the 2014 spectrum public sale – which was held after a protracted hole of 10 years, delaying the introduction of cell broadband in Pakistan (at the moment 3G) by no less than 5 years. Nonetheless, as a consequence of some bizarre circumstances and excessive public sale flooring costs, not all spectrum was offered. And no matter spectrum did promote, it didn’t promote above the public sale flooring costs. Nobody bid something greater. No “bidding” happened as such.

In 2016 and 2017, two spectrum auctions had been held, not for any new spectrum, however to promote the unsold spectrum of 2014. Just one Cell Community Operator (MNO) got here ahead every time, and lifted the supplied spectrum on the flooring value. No bidding once more.

There have been some classes to be learnt right here. The at first being; it’s the market that decides the very best value for any nation. Every time there’s an try to control the market (eg: setting excessive flooring costs) issues begin failing. The larger the manipulation, the upper is the influence.

The market selections are primarily based on the nation’s particular socio-economic circumstances and parameters like nation’s financial state of affairs, safety state of affairs, measurement, terrain, ARPU (Common Income Per Person), and so forth. For instance, Pakistan is lucky to have one of many lowest ARPUs on the earth (roughly $1.23). In line with ‘Alliance for Reasonably priced Web’, shopper tariff-wise, we’re 18th lowest on the earth (for comparability, Bangladesh with ARPU of roughly $1.71 is rated forty fifth).

Another circumstances increase the ground costs even greater.

For example, Pakistani MNOs earn in Pak rupees however the spectrum costs are pegged to US {dollars}. That will not have been a giant difficulty if rupee had been extra steady (like BD Taka). The devaluation of rupee within the final couple of years alone already elevated the spectrum costs by over 50%.

Within the newest public sale there’s additionally the requirement to double the web speeds. Now there isn’t any doubt that we want higher (a lot better) broadband speeds. Nonetheless, it’s also comprehensible that bettering velocity requires extra funding within the infrastructure on the bottom. Subsequently, maybe higher would have been to present some “aid” to the MNOs in spectrum costs (not as favour to them) however then drive them to take a position far more within the infrastructure to drastically enhance high quality and knowledge speeds.

Different impacts

Failed spectrum auctions additionally ship destructive indicators to overseas buyers typically. There are a lot of nations that may afford such destructive indicators, however not we. Our financial system is simply popping out of the consequences of a protracted so-called struggle on terror. Not solely billions of {dollars} of anticipated overseas investments in 5G are at stake, the destructive indicators journey to buyers of different sectors too.

Spectrum additionally has an influence on local weather change, as a result of much less spectrum in use implies that the identical spectrum must be re-used extra typically. For that one wants extra radio base stations, which implies extra vitality consumption, ie extra greenhouse gasses thrown into the ambiance. In a rustic whose prime minister is a robust proponent of inexperienced initiatives, we may incentivise the MNOs to make use of extra spectrum with minimal doable base stations.

The counter argument

To be truthful, one should state the counter argument as nicely. Authorities officers declare that the problem shouldn’t be of excessive flooring costs, truly there isn’t any demand for spectrum in Pakistan. As proof they cite the examples of earlier three spectrum auctions (2014, 2016 and 2017 described above).

If true, then it’s once more for the federal government to establish the explanations of low demand in Pakistan, since there seems to be ever-increasing demand for spectrum by MNOs all around the world. Some governments seem to bend over backwards to supply extra spectrum to their MNOs. China, Japan, Russia, and so forth even give it free. They absolutely don’t do it as a favour to the businesses. They do it as a result of it positively impacts their economies.

Manner ahead

So the place can we go from right here?

Firstly, the mindset – that these personal companies make some huge cash, subsequently it’s truthful to extract as a lot as doable from them – has to vary. We now have to cease treating wealth creation as a criminal offense. Secondly, the overall and absolute give attention to upfront spectrum fees should change. This was once the norm worldwide 20 years in the past. That is no extra. These days superior nations as an alternative goal the socio-economic growth that outcomes from use of broadband.

Our related officers are all upright, well-meaning, and mature. All they should do is to swallow the delight, cancel this public sale and begin afresh. All the private and non-private stakeholders ought to come collectively – as companions, not adversaries – and collectively determine the problems. For instance, if ‘lack of demand’ is recognized, then dive deeper to seek out out why there’s lack of demand solely in Pakistan. And deal with the problem.

Finally, we want selections through which everybody has a stake, and are helpful for the nation as an entire. The results of being left behind in broadband (which is occurring) are too severe and too far reaching for the nation.

This painstaking train would imply placing the nation again by one other six months. So be it. On a lighter word, because the prime minister typically says, there isn’t any navy answer!

The author is former CEO of the Common Service Fund and is offering ICT consultancy providers in a number of nations of Africa and Asia



Revealed in The Specific Tribune, September 13th, 2021.

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