Money Matters

Digital highways

Money Matters
By Mehtab Haider.
Mon, 05, 22

Pakistan’s dwindling foreign currency reserves and runaway dollars have raised important questions about the basic structure of the ailing economy. The prevailing situation has come to a point where a solution cannot be found with the adoption of the status quo approach. The solution lies in innovation and technology in order to avert the doomsday scenario.

Digital highways

Pakistan’s dwindling foreign currency reserves and runaway dollars have raised important questions about the basic structure of the ailing economy. The prevailing situation has come to a point where a solution cannot be found with the adoption of the status quo approach. The solution lies in innovation and technology in order to avert the doomsday scenario.

Pakistan possesses the potential to increase its information technology exports manifold as ICT exports including telecommunication, computer, and information services during July-March fiscal year 2021-22 surged to $1.948 billion at a growth rate of 29.26 percent in comparison to $1.507 billion during the same period in FY 2020-21. In March 2022, ICT exports stood at $259 million, showing a growth rate of 23.92 percent when compared to $209 million reported for the month of March 2021. These exports were also $58 million higher than export remittances of $201 million during the previous month of February 2022.

Exports from the Indian IT industry stood at $149 billion in FY21. Export of IT services has been the major contributor, accounting for more than 51 percent of total IT export (including hardware). BPM and Engineering and R&D (ER&D) and software products exports accounted for 20.78 percent each of total IT exports during FY21 to May 6, 2022.

Keeping in view different comparisons with India, Pakistan’s IT exports could fetch $20 billion. However, the government envisaged jacking up exports of ICT to $5 billion by end of the next fiscal year 2022-23. This target is hard to achieve but there are some pre-requisites such as consistency in policies and incentivising the sector in a smart manner that can really create a difference.

Without improving the IT as well as telecom sectors, Pakistan cannot achieve its desired objectives. The remaining auction of available spectrum, as well as the launching of 5G, require a lot of spadework, and without effective implementation, nothing substantial can materialise.

Last week, SAMENA Telecommunication Council arranged leaders’ summit in Dubai in the aftermath of the COVID-19 pandemic in collaboration with Huawei and others. Stakeholders participated in the summit with an aim to build an ecosystem that ensures sustainability and inclusiveness for the whole Middle East and South Asia region.

SAMENA Telecommunications Council is a tri-regional not-for-profit industry association spanning more than 25 countries, including Afghanistan, Algeria, Bahrain, Bangladesh, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Nepal, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Sri Lanka, Sudan, Syria, Tunisia, Turkey, United Arab Emirates, and Yemen.

It represents the interests of more than 85 telecom operators and service providers in the fixed and mobile space, and stakeholders from the wider digital ecosystem, including technology, equipment and software manufacturers, internet companies, consulting companies, academia, and regulatory authorities.

The launching of 5G in the whole of Middle East and regional connectivity would be among the major areas of discussion. The launch of 5G technologies in different countries such as the Kingdom of Saudi Arabia and Dubai could become a viable options and their experience could be replicated in other parts of the region.

Huawei Middle East Roundtable was arranged on the occasion of SAMENA’s leaders’ summit, which was addressed by Huawei Middle East President Steven Yi.

When asked by this scribe how much investment was needed in Pakistan to launch 5G technology keeping in view the experience in the Middle East, he said deploying 5G involves massive investment because it was an end-to-end solution. It was not just the wireless base station, but also core network and so on; so it needed a large investment.

He believes that before making such a large investment, the need was to first encourage the adoption of digital technologies and transition, “so that more people could enjoy wireless and fixed broadband services to promote the growth of digital economy and the telecom industry”.

The telecom industry, he said, was very competitive in Pakistan, the average revenue per user for telecom operators was one of the lowest in the world, and therefore it was very difficult for the operators to survive and make profit.

“In my experience, it will be very difficult for them to make large investments to deploy 5G,” he said. He recommended to pay attention to encouraging the adoption and utilisation of 4G network, which was sufficient for the majority of the regions in Pakistan, and to deploy 5G in hotspots such as mega cities like Karachi, Lahore and Islamabad.

For 5G readiness in Pakistan, Huawei representative argued that in the developed telecom market globally, 5G was now the go to technology to cater customer needs for high speed and new services. New 5G air interface has progressed by leaps and bounds, with higher capacity, lower latency, and the ability to support a massive number of connections.

Countries that have launched 5G have more than 70 percent of their population using 4G, whereas in Pakistan this number was still 42 percent, which was very low to create the need for 5G technology.

The roads on 5G highway were created by spectrum, which was less and expensive in Pakistan and required some key bands of 2300, 2600 and 3500 MHz. Operators in Pakistan already paid spectrum fees for 2G, 3G and 4G technologies and additional 5G spectrum affordability would be a big challenge for them.

The 5G handsets and devices were the cars which would be running on this highway. In Pakistan handsets supporting 5G are less than 1 percent. These devices are expensive and affordability of these devices is a big challenge for a majority of users.

Pakistan needs to lay down fibre optics to deploy 5G technology. Currently, the country’s fibre lines serve less than 12 percent of the consumers.

Building infrastructure on these highways is expensive and requires operators to pay high taxes and duties too. The return for operators is very low with average revenue per user being less than $1.5.

Therefore, in Pakistan, 5G business case for operators is an uphill task and requires huge additional investments. The telecom operators in Pakistan are only moving in one direction, and the mobile industry would not benefit from 5G without overhauling the operator business model.


The writer is a staff member