Third generation (3G) technology has once again become the talk of the town. However, this time round, chances of 3G licenses being actually granted look a lot brighter given that government apparently looks serious in generating non tax revenue of Rs51 billion from telecommunication sector.
The debate over whether the time is suited to introduce 3G technology in Pakistan or not and the questions marks over the viability of 3G in the country is yet to reach a conclusion.
But, the major driving force behind the optimism on the part of government is the successful auctioning of 3G license in India last month. Indian government netted a handsome $14.6 billion from the 3G auction, providing space to deal with the rising deficit. Not that Pakistan is looking forward to such a huge amount, but Indian episode has surely filled hopes in the government camps.
Be it any technology, modernization of communication technology will always bring prosperity to the country in the form of growth in GDP. Moreover, 3G high speed data transfer capability would pave the way for the development of industrial growth, government efficiency and information technology etc.
But, low literacy and expensive smart phones, along with limited access to local language contents-- pose a hindrance for the success of 3G-- and would undoubtedly compel mobile operators to closely watch their investment-return equation, as 3G non voice revenues are expected to be insignificant.
As average revenue per user (ARPU) is hovering around $2.5, it is quite likely that mobile operators will demand for incentives either as a concession in the licensing fee or permission for the consolidation.
"Pakistans telecoms market will have to consolidate before the government can even consider a planned push into third-generation technology", said Jon Eddy Abdullahs, Telenor Pakistans chief executive, a few months back talking to international media. For fiscally constrained government, granting any discount in the licensing fee will definitely be an unfeasible option. And, since high cost of licenses always translates into high cost of services to the end users, which are mostly price sensitive due to low purchasing power, it is quite likely that cellular industry will witness mergers and acquisition in the foreseeable future.