Home Business Maximizing Returns: Telecom Operators Propose New Model for 5G Development in Pakistan

Maximizing Returns: Telecom Operators Propose New Model for 5G Development in Pakistan

Maximizing Returns: Telecom Operators Propose New Model for 5G Development in Pakistan
Maximizing Returns: Telecom Operators Propose New Model for 5G Development in Pakistan

The advent of 5G technology has brought forth a multitude of opportunities and challenges for telecom operators worldwide. In Pakistan, the launch of 5G faces a significant hurdle in the form of high capital and operational expenditures (Capex and Opex), which could hinder the return on investments. To address this concern, telecom operators have put forth a proposal urging the government to adopt an alternative model that promotes earnings through 5G development, rather than relying solely on spectrum fees and taxes.

In official documents obtained by ProPakistani, it has been revealed that telecom operators are advocating for tax breaks in spectrum fees and incentivizing local handset manufacturing applications. Additionally, they emphasize the importance of streamlining Right of Way (ROW) decisions through the implementation of a one-window operation. This move is deemed inevitable in Pakistan to ensure a seamless transition into the realm of 5G.

Pakistan has already demonstrated its capability to launch 3G and 4G networks with remarkable success back in 2014. However, the operators stress that in order to progress towards 5G, the government, particularly the Ministry of Information Technology and Telecommunication (MOITT), must provide the necessary incentives to ensure a successful transition.

The issue of maximizing the benefits of 5G was also raised during the South Asian Telecommunication Regulators’ Council (SATRC) Workshop on Policy, Regulation, and Services (PRS) held in Pakistan. In a presentation delivered by a representative from a telecom operator, it was highlighted that one of the key steps that the SATRC must take is spectrum harmonization. This crucial measure aims to prevent issues and conflicts similar to those experienced in the Gulf region.

The establishment of a sub-committee on spectrum harmonization is of utmost importance due to the fact that the propagation of radio waves knows no geographical boundaries. For optimal efficiency, it is essential for regulatory and technical rules to be consistent across all SATRC member countries. This includes synchronization techniques, frame and sub-frame configurations, as well as the starting and ending frequencies of bands. Furthermore, it is vital to address the utilization of vacant bands and understand why they remain unoccupied.

Among the SATRC member countries, some have already auctioned the 5G spectrum or shortlisted the bands for it. Bangladesh and India, for instance, have conducted auctions but are currently utilizing the spectrum for 4G technology. On the other hand, Maldives and Iran have limited 5G coverage, while Nepal and Sri Lanka are still in the trial phase.

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Previously, telecom operators in Pakistan had put forward several demands to facilitate the launch of 5G services in the country. They requested a free spectrum for the initial five years and zero taxes on the import of equipment and 5G handsets. However, official sources indicate that the government is considering various proposals for the introduction of 5G, particularly in major cities. The previous plan to auction the 5G spectrum by the end of March 2023 could not be realized due to political instability in the country.

Stakeholders in the industry, alongside senior government officials, are now expressing doubts about the feasibility of launching 5G services by the end of December 2023. The prevailing economic situation in the country, coupled with the state of the telecom market, makes this target appear highly challenging, if not impossible.

With regards to the launch of 5G, telecom operators have submitted recommendations to the government, urging the implementation of an innovative and implementable 5G policy. The proposed policy should encompass the following considerations: the provision of free spectrum for the initial five years, zero taxes on equipment and handset imports, and a delay in any auction until the use cases for 5G have been developed. Additionally, the operators emphasize the need for policy interventions to discourage the production and import of 2G and 3G handsets.

The Pakistan Telecommunication Authority (PTA) has responded to the demands of telecom operators, stating that the government will issue a policy directive to facilitate the launch of 5G in the country. The authority, however, has highlighted several challenges and impediments that need to be addressed. These include the low penetration of 5G-supported handsets and optic fiber cables (OFC) in the Pakistani market. Additionally, factors such as increasing inflation, low average revenue per user (ARPU), rising operating expenses (OPEX), and high taxation pose further obstacles to the successful implementation of 5G services.

The percentage of 5G-supported handsets in Pakistan is currently less than one percent, compared to many developed countries that have already embraced the technology. Consequently, Pakistan faces significant challenges in offering 5G services. Moreover, the low penetration of OFC, limited potential use cases, low tower density, increasing inflation, low ARPU, rising OPEX (including fuel and electricity prices), and high taxation collectively impact the viability of launching 5G.

According to international projections, by the end of 2026, 5G is estimated to attract approximately 3.5 billion subscriptions worldwide, generating around 45 percent of the total global mobile traffic data.

The PTA asserts that the introduction of 5G is vital for Pakistan to keep pace with regional developments. However, before a comprehensive 5G policy is issued, the challenges highlighted by the authority must be effectively addressed by the government.

In conclusion, the proposal put forth by telecom operators to the government of Pakistan outlines a strategic approach to maximize returns on 5G development. By adopting alternative models and providing incentives, the government can empower the telecom sector and propel the country into the era of 5G technology. It is crucial for the authorities to address the challenges mentioned, such as spectrum harmonization, low handset penetration, and high operating expenses, to ensure the successful implementation of 5G services in Pakistan.


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