BR RESEARCH: Beyond revenue: Rethinking Pakistan’s spectrum auction

After a prolonged gap, Pakistan is moving toward a long-overdue spectrum auction. This moment deserves to be viewed not as a sectoral event, but as a strategic economic decision. In a digital economy, spectrum is foundational infrastructure—comparable to roads, power, and ports. Its allocation shapes productivity, competitiveness, and inclusion for years to come.

The Information Memorandum signals a more forward-looking intent, particularly in its focus on spectrum mix, affordability, and market sustainability. If implemented well, the auction can unlock multi-sector growth, support exports, strengthen public services, and expand opportunities for millions of citizens.

However, the economic impact of this auction will ultimately depend on whether it enables sustained investment in national digital capacity. Pakistan today faces severe network congestion due to spectrum scarcity and high utilization. This is increasingly visible in slow speeds, latency, and service disruptions.

The situation resembles forcing metropolitan traffic onto narrow, underdeveloped roads—an outcome that inevitably constrains mobility, commerce, and growth.

Past auction designs prioritized short-term fiscal returns over long-term infrastructure development. High reserve prices and compressed payment schedules absorbed large volumes of financial resources at the outset, limiting the ability to upgrade networks and expand coverage.

At the same time, declining user spending power and falling ARPU—from approximately $4 to $1.4—have weakened the overall investment environment.

The result has been a persistent digital capacity gap. Congested networks impose hidden costs on small businesses, freelancers, students, exporters, and public institutions that depend on reliable connectivity. Slow and unreliable internet is not merely a technical inconvenience; it is a drag on productivity, innovation, and competitiveness across the economy.

The current auction presents an opportunity to correct this trajectory. Payment structures that extend instalments over the license term, rather than concentrating them in the first five years, would align fiscal objectives with infrastructure outcomes. Similarly, financing costs should reflect opportunity costs rather than generate excessive spreads, enabling greater capital retention for network development.

While attention is understandably focused on next-generation technologies, immediate economic gains will largely come from strengthening existing networks. Most current performance challenges stem from congestion on 4G infrastructure.

Additional spectrum in these bands would deliver faster improvements in quality and reliability, while 5G remains essential for long-term industrial and technological transformation.

Device affordability represents another binding constraint. Global experience shows that adoption is driven more by access to affordable smartphones than by network availability.

High taxation, limited financing mechanisms, and the continued production of basic 2G devices have slowed digital inclusion. These barriers restrict participation in e-commerce, digital services, online education, and remote work.

Moreover, according to World Bank data, there is a significant gender disparity in phone ownership in Pakistan.

Only around 30 percent of women own phones, and the majority of these are feature phones, compared to over 90 percent ownership among men (with close to half of men using feature phones). This gap remains substantial. Therefore, rationalizing handset taxes, supporting mass-market financing frameworks, and discouraging low-end legacy devices would accelerate ecosystem development.

A centralized credit information mechanism for device financing, similar to banking systems, could further enable responsible expansion while managing default risks.

Crucially, digital infrastructure policy must be anchored in economic outcomes rather than short-term revenue maximization. Network expansion should be treated as a strategic investment in national capacity. Fiscal gains, employment growth, and export potential follow when digital systems function reliably at scale.

Looking ahead, policy must also consider how digital services can generate sustainable user value. As connectivity becomes integral to livelihoods and enterprises, users must be able and willing to pay for quality, reliability, and security. Enabling this transition is essential for long-term ecosystem viability.

Pakistan’s population of over 250 million, with its strong youth demographic, represents a significant economic opportunity. With the right infrastructure, pricing structures, and access frameworks, this demographic dividend can translate into innovation, entrepreneurship, and global competitiveness.

The upcoming spectrum auction is therefore not merely a regulatory exercise. It is a structural reform that will shape Pakistan’s digital economy for the next decade. If designed with a long-term, economy-first perspective, it can become a cornerstone of national development. If not, it risks perpetuating capacity constraints that limit growth in an increasingly digital world.