Unlocking Pakistan’s digital potential

LAHORE: Pakistan’s telecom sector, like its global counterparts, is grappling with numerous challenges that hinder its potential to innovate and thrive. However, the challenges here are more pronounced due to the country’s lagging technological adoption.

The future of the telecom industry hinges on embracing innovation, diversifying services and fostering collaboration between the government and the IT sector. A strong telecom infrastructure can act as a catalyst for economic growth, especially by boosting IT and software export potential. Achieving this vision, however, requires regulatory reforms, public-private partnerships and targeted investments in both technology and human capital.

Telecom operators face challenges unique to the region, despite a large smartphone user base. These include regulatory and licensing hurdles, excessive taxes on telecom services and equipment, and delays in spectrum allocation, including 5G, which stifles innovation. There is a lack of clear regulatory frameworks for emerging technologies.

High operational costs pose another significant obstacle. Rising energy costs for running telecom towers amidst the country’s energy crisis and currency depreciation, which makes importing telecom equipment more expensive, add to the burden. Furthermore, intense competition in the past led to price wars that drove down average revenue per user (ARPU). The sector’s over-reliance on declining voice and SMS revenue streams, replaced by internet-based alternatives, further exacerbates the problem.

Investment in advanced technologies remains insufficient, with delays in the 5G rollout due to high spectrum costs and inadequate infrastructure. The government needs to lower spectrum prices to make 5G deployment feasible. Moreover, insufficient investment in infrastructure modernisation has led to slow internet speeds. While recent mergers have reduced unhealthy competition, they have not significantly improved service quality. Rural areas remain under-connected, limiting equitable digital growth.

The 5G rollout is critical for the telecom sector’s future, enabling advanced applications such as smart cities, IoT and industrial automation. However, this requires substantial investments and a clear regulatory framework. Telecom operators can diversify into fintech, e-commerce and cloud services, leveraging their existing customer base and infrastructure. Offering business-to-business solutions like cloud computing, cybersecurity and managed services could create sustainable revenue streams.

Collaborations with software and IT exporters can position telecom operators as key enablers of digital transformation, enhancing IT exports. Expanding services to rural areas would increase customer bases and foster financial inclusion through mobile money services.

The government’s support is pivotal for this transformation. A long-term roadmap for spectrum allocation, particularly for 5G, is essential. Reducing taxes and duties on telecom equipment and services would encourage investment while ensuring fair competition without hindering innovation.

To enhance infrastructure development, public-private partnerships must be facilitated to expand telecom networks in underserved regions. Subsidies or tax breaks for rural connectivity expansion can also help.

Investment in research and development (R&D) and skill development is vital. The state must support telecom R&D and workforce upskilling to prepare for emerging technologies like AI, IoT, and 5G. Digital literacy programmes and the digitisation of government services could stimulate demand for internet-based solutions.

Efficient telecom operators can significantly boost IT and software exports by enabling seamless connectivity for remote work and outsourcing. High-speed, reliable internet is critical for freelancers and IT companies serving global markets. Advanced telecom infrastructure would also enable IT companies to host services locally, improving efficiency and competitiveness. Effective digital networks, including 5G, can foster innovation in AI, IoT, and other technologies, creating exportable solutions and positioning Pakistan as a global IT outsourcing hub.