On upgrading digital infrastructure

Continuing with the digital theme, the second pillar identified under the government’s Digital Pakistan Initiative is that of building “digital infrastructure”. The idea is to beef up the supply side of digital economy so that the public and the private sectors can offer digital solutions for governance, commerce, and everyday life. While a detailed policy framework is awaited, it is instructive to shed light on some of the digital planks that need strengthening.

First, for digital infrastructure to take root, broadband penetration, especially fixed broadband, needs to be significantly enhanced. The policy tilt is in favor of mobile broadband in Pakistan, with over 70 million subscriptions reported by the telecoms regulator lately. This imbalance needs to be addressed in favor of fixed broadband, which has the capacity and the reliability to help in expanding digital infrastructure.

Second, it needs to be independently assessed as to how much of the adult population and businesses actually have access to broadband Internet. Besides, what is the regional breakdown of those users, what is the gender divide and how are different income-segments represented in the mix? Answers to such questions may lead in the direction of identifying gaps and bottlenecks so far as plain-vanilla broadband connectivity is concerned.

Third, while digital infrastructure is incrementally laid over time, it is critical for digital platforms to be interoperable. It is no good for a government department to use a system that cannot communicate or collaborate with another department, leading to wasted time and resources. While integrated digital architecture is a must for public sector, private sector also needs to up its game. For instance, in digital financial services, wallets of different service providers currently cannot transact with each other.

Fourth, the trend towards cloud-based computing needs to be better acknowledged and adopted in Pakistan if the digital infrastructure is to grow in line with global best practices. The banking regulations, for instance, discourage storage of user data offshore, out of concern for data security. Meanwhile, there is no policy focus to encourage domestic cloud companies. It is time to get comfortable with the cloud, because its benefits significantly outweigh the costs.

Fifth, the supply-side alone cannot provide traction for digital infrastructure in the country. The demand-side (in a B2B context) also needs to become an active digital user on an industrial scale. For instance, there is a need to embed ICT solutions in areas like construction (highways, bridges, houses, etc.), traffic and transportation, water conservation, waste management, power and other utilities (e.g. smart grids, AMI meters), smart home appliances, and more.

Sixth, the fixation with “Software Technology Parks” as a marker for digital infrastructure needs to be tempered. An STP is much more than simply labeling a building as a ‘software park’ and then asking IT companies to move there. There have to some strong incentives like tax benefits, high-speed broadband, lower utility bills, and local-area facilities. It should be qualitatively different to do business inside an STP than outside. Perhaps one way to leverage the concept is to set up STPs in smaller cities and towns.

And lastly, it is fine to establish incubation centers here and there, for these platforms are a good way to showcase local ingenuity and attract foreign capital. But perhaps attention also needs to be paid in helping IT-related SMEs to build scale through participation in government IT contracts. In the long run, large IT champions can provide the multibillion dollar exports that this country needs. In that context, setting up a centralized federal entity that consolidates all IT-related procurement can go a long way.