April 23, 2016 marks two years since the day which will go down as an important date in the history of Pakistan’s telecom sector: Pakistan Telecommunication Authority, on this date, held the much-awaited spectrum auction of licenses for third-generation (3G) and fourth-generation (4G) mobile technologies.
Pakistan was at least a decade behind the developed world in adopting the next-generation of mobile technology. However, it has witnessed explosive growth in the use of high-speed mobile internet since its launch two years ago.
On the second anniversary of the 3G auction, Pakistan Today takes a look at the growth that followed and the impact it had on social media, ecommerce, and smart phone penetration to name but a few. The report also looks at the factors hindering the growth of internet to rural Pakistan.
Supported by the launch of 3G service, the number of broadband connections in the country has surpassed 30 million as of March 2016 – the latest month for which data is publicly available. This translates to a whopping 715% increase from under 4 million broadband connections when the first 3G service was launched in the country.
The number of 3G and 4G users now constitutes 90% of the country’s total broadband base and 21% of its total mobile phone user base, which stands at 131 million.
“During the last two years, cellular mobile internet and broadband usage has had a significant impact on data revenue streams of the telecom sector,” PTA said in its annual report for fiscal year 2015.
Data revenue of all cellular mobile operators (CMOs) has increased by more than three times to Rs 115 billion during the last five years and now constitute a quarter of the sector’s total turnover, PTA said attributing this growth to increase in the use of 3G and 4G services.
The telecom sector’s regulatory body says it expects the trend to continue in the coming years as subscription to data connections is increasing and data usage is expanding in the country.
This rapid adoption of the next-generation of mobile networks has proved to be a new cash cow for the telecom sector, but its impacts are also far reaching.
The launch of 3G and 4G services has worked as a catalyst for connecting the population with the cyber world. In other words, more than one million, 1.3 million to be exact, new users have been joining the mobile broadband network every month since the rollout of 3G services in the country.
Consequently, the number of Facebook users in Pakistan surged from 13 million at the time of the spectrum auction to over 20 million – who are doing business, sharing knowledge, and contributing to social, political and intellectual debates using the platform.
Moreover, this growing internet user base has helped the country’s ecommerce sector generate more business and more importantly, employment.
Pakistan’s ecommerce market was estimated to be $30 million when the 3G service was launched – it has increased more than three folds since then and reached close to $100 million now, say industry sources.
The ecommerce players Pakistan Today spoke to said a bulk of their traffic came from desktops till mid-2014 while smart phones (mobile platforms, such as iOS and Android) accounted for only a tenth of it. However, they now receive 50% of their traffic from smart phones.
Another area where ecommerce businesses benefitted from the uptake of mobile broadband is sale of smart phones, the top-selling product on most ecommerce stores.
According to Shayaan Tahir of Homeshopping.pk, the number of smart phones sold on his store has doubled over the past one-and-a-half years.
In fact, a glance at the national statistics clearly indicates that the share of smart phones in the country’s mobile phone market has increased significantly.
The smart phone shipments to Pakistan increased by 123% in 2015, one of the fastest growth rates in the Asia and Africa regions, according to International Data Corporation. Smart phones now account for half of the country’s total mobile phone imports, a dramatic increase from 7% at the end of fiscal year 2012.
While the numbers look impressive, the coverage remains limited to big cities, which means a bulk (about 65%) of the country’s population remains unconnected.
Although Pakistan’s internet penetration has increased from under 9% at the time of the 3G launch to 15.5% at the end of March 2016, the State Bank of Pakistan recently put the country among Sub-Saharan African and other South Asian nations, which have the lowest internet adoption rate – between 0 and 19%.
“The rollout of 3G and 4G technology was not as aggressive as it should have been,” Parvez Ifitkhar of the Islamabad-based think-tank ICT Forum Pakistan said.
Explaining, the ICT expert, said the CMOs spent a huge sum when they bought 3G spectrum and were left with very little to finance the rollout of their next-generation mobile services beyond mega cities – the quality of service is not up to the mark while coverage of 4G service is very limited to say the least, he said.
The government should sell more spectra and give some relaxation, such as tax benefits, to the sector so they can expand their network, the expert said. Islamabad needs to change its thinking, he said. They shouldn’t always focus on fiscal deficit or how much they can earn from selling new spectrum but see the broader social-economic benefits that the technology can bring to the country.
