ISLAMABAD: The caretaker government has little in hand with respect to fiscal and policy interventions to oblige cellular mobile operators for participating in 5G spectrum auction, and unlikely to materialise the auction anytime soon, official sources revealed to Business Recorder.
Caretaker Federal Minister for Information Technology and Telecommunication Dr Umar Saif said that Pakistan is going to launch 5G services in the country within 10 months.
However, official sources revealed that the 10 months’ time would start in line with the Public Procurement Regulatory Authority (PPRA), once the government unveils policy directives for spectrum auction, for which pre-requisites are yet to be finalised.
Telecom operators have proposed the government to adopt a model to earn with 5G developments instead of spectrum fee and taxes, as return on investments will be a serious issue with 5G launch in Pakistan due to high Capex and Opex requirements. Official documents revealed that telecom operators have proposed tax breaks in spectrum fee and local handset manufacturing applications.
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Further, one-window operations for Right of Way (ROW) decisions are becoming inevitable in Pakistan, they added. “Pakistan launched 3G and 4G with very mature systems in 2014. We can move in 5G direction certainly but the government of Pakistan/ Ministry of Information Technology and Telecommunication (MoITT) should incentivise to make this transition a success,” the operators added.
The industry stakeholders, as well as, senior government officials are terming it next to impossible while some are of the view that 5G launch is difficult even by end of December 2024, keeping in mind the economic situation in the country in general and the telecom market in particular.
Operators demanded the introduction of innovative, radically different and implement-able 5G policy with the following to be considered; (i) free spectrum for the first five years with zero taxes on the import of equipment and 5G handsets/device, (ii) any proposal of an auction should be after five years, once the use cases have developed, and (iii) policy intervention required to ban 2G/3G handset local production as well as import.
Telecom experts have stringed several challenges and impediments including low handset and optic fibre cable (OFC) penetration, increasing inflation, low average revenue per user (ARPU), and rising operating expenses (OPEX) coupled with high taxation to launch 5G services in the country.
In such a scenario, it would not be possible for the caretaker government to launch 5G in the country anytime soon, as it is unable to give incentives and tax break to operators. Further, CMOs have warned that the country is heading towards a digital catastrophe due to the wrong policy of pegging telecom licence price with the US dollar.
The devaluation of Pakistani rupees has jeopardised the business case for telecom companies, as telecom licence fees and interest on instalments are pegged to the US dollar, which is the single biggest threat and precludes any sound financial planning whatsoever.
Sources said that approximately eight to 10 months would be required after the issuance of the Policy Directive by the government of Pakistan to complete the process of the 5G launch in the country. First, the government would communicate to all stakeholders that it is going to launch 5G and would prepare a draft policy directive.
The policy would be approved first, by the Economic Coordination Committee of the Cabinet (ECC) and then by the federal Cabinet to be chaired by the prime minister. The approved policy would be shared with the PTA and the Frequency Allocation Board (FAB). The FAB would require specifying frequency bands, while the PTA would conduct the required process.
After getting the policy directive for auction of 5G from the MoITT, the PTA would issue an RFP (Request for Proposal) for hiring of consultancy services for the auction. It would take two weeks while one additional week would be required for the advertisement and process through Embassies in countries such as the US, the UK etc.
As per the PPRA rules, it would require 30 days to complete the process while in reaching this point total of two months would be required.
After the submission of bids, two weeks would be needed for technical evaluation and later opening of financial bids. Further, 10 days would be required if any entity or person has an objection and then an agreement would be signed with the qualified consultant.
The consultant(s) hired for the purpose will be responsible to procure the auction in a transparent, professional and profitable manner.
The consultant would require at least two months to complete the report and submit to the auction advisory committee. After approval, it would be sent to the ECC and then to the cabinet where approval would be granted for benchmarks, prices, bands etc over six months would be required (from starting date), while reaching this point.
The PTA, after this, would publish Information Memorandum (IM) and it requires 45 days as per the rules and taking the time to over eight months. Later, auction would be held and spectrum award and payment would take 30 days. All the deadlines given are a sort of ideal situation where no objection or court intervention is included, the official added.
The previous two governments had planned to auction the 5G spectrum latest by end of March 2023 in the country with the initial launch in big cities. However, due to political instability as well as economic crunch and LCs impacted the plan, sources added.
Sources said that it would be hard for 5G to make any business case in the next two years because less than one per cent of consumers afford such handsets in the country. People think that better internet would be provided once the 5G is launched in the country, but it could be provided with 4G even now by government interventions for greater propagation.
Copyright Business Recorder, 2023