ISLAMABAD:
Pakistan cannot achieve its goal to enhance information technology-based exports to $25 billion in five years if the spectrum auction is delayed by another two years, a regional head of the global mobile phone operators’ body said on Monday while urging the government to remove legal obstacles.
Julian Gorman, Head of Asia Pacific of Global System for Mobile Communications (GSMA), the representative body of mobile phone operators, on Monday briefed the government’s spectrum auction advisory committee about the prospects and challenges of the upcoming auction.
Pakistan has quite an admirable digital vision, a cashless society, getting people connected and $25 billion in exports by 2030, but all this cannot be achieved without first conducting the spectrum auction, Gorman said after the meeting while briefing journalists.
The IT exports are dependent on reliable and good quality connectivity, he added.
GSMA and the local telecom operators briefed the committee days after Jazz complained that ongoing delays in the spectrum auction were hurting both customers and the economy. But the Minister for Information Technology, Shaza Fatima Khawaja, recently said the main reason for the delay in the 5G spectrum auction was ongoing litigation and uncertainty surrounding the Pakistan Telecommunication Company Limited (PTCL)-Telenor merger.
GSMA has recently conducted an analysis to estimate the cost to the country and lost GDP if the spectrum allocation does not go ahead this year, Gorman said. He added that if it was delayed by another two years, the cost to the country would be $1.8 billion. If the delay is five years, the cost will be close to $5 billion, he added.
GSMA recommended to the advisory committee that if the spectrum is made available only from 2027 due to high reserve prices and other litigation issues, 4G network improvements will slow down and 5G rollout will be delayed by two years.
It suggested resolving all outstanding legal, regulatory and fiscal issues, setting reserve prices conservatively, lower than previous auctions, and denominating spectrum fees in local currency instead of US dollars to reduce risks from currency fluctuations.
The mobile operators have also demanded payment flexibility with instalment options and affordable upfront fees, along with deducting costs of license obligations from spectrum fees to ease operators’ financial burden.
More importantly, they have asked for a clear spectrum roadmap to reduce uncertainty and support network planning.
Gorman said the last spectrum allocation was about four years ago and in the previous auction a lot of spectrum remained unsold, which was a negative sign to the industry as well as the investors.
“It’s important that spectrum is allocated on reasonable terms, so that the industry can use it,” said Gorman while urging the government to review its policy of charging dollar-based spectrum prices and also collecting interest on payments in instalments.
The cost of spectrum to the mobile industry is about twice the regional average and it accounts for about 20% of revenues, he added. He said rupee instability in the past also increased the cost for mobile phone operators.
The industry does not have the capacity to invest at the levels required to create networks that will support the government’s digital vision.
He said 5G and next generation connectivity are different from what they used to be. Even in high-value markets, where auctions once fetched $40 billion, those values have now come down by 10 to 20 times, said the GSMA regional head.
He underscored that Pakistan should not get carried away with benchmarks set many years ago in a different era, with a different quantity of spectrum and scale of networks. “Our recommendation is to massively bring down the price to enable investment into the next generation,” he added.
“The government has ambitions to be a cashless economy and Raast is about instant payments. How can you have instant payments with low quality broadband? It’s not possible,” said Gorman.
To a question, he said GSMA has recommended removing the legal obstacles to ensure a timely auction takes place. The minister of law, who also attended the advisory committee meeting, was quite positive and assured that the government would try to resolve these issues, said Gorman.
The question is whether the state wants it badly enough for the people. If yes, then it would have to do it differently, he added.
Gorman said the government will have to address the court case issue as well as take a decision on the merger of Telenor and Ufone.
