Telecom regulator, the Pakistan Telecommuni-cations Authority (PTA) released its annual report earlier this week. The report narrates the industry performance, some of which BR Research has already recounted (see "Telecom indicators are healthy again," published December 31, 2014, and "Telcos in 2014," published December 29, 2014). Instead, lets find out what the regulator had to say on big issues facing the industry.
The PTA estimates that the 3G services "will raise economic output of Pakistan by 1.1% of GDP resulting in increase of 1.6 to 2.4% in employment." That estimate has been derived from a World Bank study. Yet there is no mention of the means to harness high-speed mobile broadband for job-creation and citizen services, especially in rural areas where it is needed most.
Hats off on conducting the 3G/4G license auction last year, but what is required now is a "useful connectivity" policy. There is some hint of something-in-the-making though. For the Planning Commissions Vision 2025, PTA has identified three areas where it would focus on: smarter communities, enabling technologies, and supportive regulation.
"PTA believes that smarter communities with connected people and devices are the future of communication, for which enabling technologies must be encouraged, with supportive regulations playing the role of a catalyst," reads the report. That makes for a great synopsis. What remains lacking is a roadmap of how to start working towards the three objectives simultaneously.
Then PTA mentions its fight against grey/illegal voice termination. Good job there, too! A lot of surveillance and enforcement activity resulted in FY14. Some 52 people were arrested and 327 gateways were busted in 62 raids during the year; over half million Sims were blocked in monitoring operations.
But we don think that doing that alone will control or eliminate the grey-traffic economy. Without addressing the root-cause, telecom authorities are playing a game of whack-a-mole: they bust gateways on some locations, yet many more pop up somewhere else.
As part of course correction on that matter, the watchdog admits that despite best intentions, the controversial mechanism of International Clearing House (ICH) "could not give the expected results and caused significant increase in grey traffic which ultimately resulted in steady decrease in inflow of Foreign Exchange and collections for the national exchequer..." Authorities did well to rescind ICH last year, but now it needs to clear the legal hurdles fast and eliminate grey traffic incentives like APC charge and regulated tariffs.
Report contains something on infrastructure sharing, which means encouraging operators to install more BTS antennas on a given tower so as to reduce the physical and carbon footprint of telecom towers. A September 2010 policy directive demanded a 1.5 tenancy ratio (150 antennas on 100 towers - arguably a pretty relaxed target) in three years. As per PTA, the current tenancy ratio is 1.3 - abysmal to say the least.
Why the telcos have remained resistant on the infrastructure-sharing issue that directly benefits their capex and opex is mind bending.
There were 37,576 cellular towers as of June 2014. More towers are expected to come online as many un-served and under-served areas get basic connectivity and as 3G services expand towards non-metro areas. Some investors are working to establish a third-party tower holding company to manage the infrastructure-sharing difficulties, Godspeed to them.
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