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GSMA warns higher spectrum fees threaten mobile connectivity


May 23, 2019

KARACHI: Mobile communications industry body GSMA on Wednesday warned of risks to digital economy in Pakistan after the government demanded what it said higher fees from telecom operators to renew their spectrum licences.

“It’s consumers that will lose out from imposing unfair conditions that put operators’ businesses in jeopardy,” Brett Tarnutzer, head of Spectrum at GSMA said in a statement. “We’ve already seen the damaging consequences that high spectrum prices have on coverage and quality of service in other countries. It’s important that Pakistan doesn’t repeat these mistakes, and place gaining inflated revenues from spectrum licenses above the connectivity of its citizens.” The London-based trade body said the high fees proposed for renewing the licences would slow the development of the country’s digital economy and affect operators’ ability to invest in and support affordable services. The body represents the interests of more than 750 mobile network operators worldwide with over 350 companies in the broader mobile ecosystem

The licences of two of the country’s largest mobile operators - Jazz and Telenor - are set to expire on coming Saturday. They were asked to pay $450 million each to renew their licences – more than double the dollar price at which operators originally acquired licences at auction in 2004. Chinese mobile operator Zong is also due to renew its licence this year.

The GSMA called for reconsideration of higher spectrum fees in a letter to the Pakistan Telecommunication Authority (PTA) and Frequency Allocation Board, according to the statement. The renewal price should take into account the current market situation instead of burdening the operators, it said.

Number of mobile phone subscribers has surpassed 161 million, the latest data of PTA showed. Number of 3G/4G subscribers crossed 67 million. Mobile technology is the primary means of communication for millions of Pakistanis, and enables the delivery of education, healthcare and financial services. A latest GSMA Intelligence research estimated the total economic impact of mobile on Pakistan’s GDP at $17 billion – equivalent to 5.4 percent of GDP. The trade body also demanded of the government to extend the deadline for agreeing licence terms for all mobile network operators on a three-month rolling basis at no cost, “until it can reach a decision with operators”.

“We are committed to engage in an open dialogue to help the government achieve its policy objectives and facilitate sustainable investment in Pakistan’s digital future by all mobile operators,” it said.

The GSMA also expressed concern over taxation on mobile technology. “Spectrum prices and taxes should be set at a sufficiently low level that allows operators to deliver affordable services and deploy mobile broadband widely,” Tarnutzer said. “The high fees work against government efforts to bridge the digital divide and build the digital economy.” Alone in 2017, the total direct tax and fee payments by the mobile sector were estimated at $950 million. The mobile sector makes a large contribution in taxes and fees relative to its economic footprint with around 12 percent of its revenue going to sector-specific tax and fee payments.

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