State of Telecom Industry in Pakistan

Recently the newly launched Mobilink Foundationcame under discussion at Telecom Grid Pakistan. Some members of the group were skeptical of the foundation and thought of it as another marketing tactic. My view on this is optimistic - whats better? a successful company with a dedicated organization or the usual half-hearted efforts on social activities without focus?

Bottom line is that as long as some useful work gets done for the society I don’t mind the marketing advantage for the company … thats a side benefit, a bonus. I hope that the Mobilink Foundation succeeds at their stated aim and it is staffed by people who truly care about the future of children in Pakistan.

Our vision is free access to education for children and healthcare for all Pakistanis. We seek to promote a country in which all children go to school and people have access to healthcare, irrespective of their financial strength and background. We aim to bring about sustainable improvements to the living standards of the underprivileged by working with local communities and relevant organizations within Pakistan.

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Location Based Services (LBS)  are one of the hottest new emerging growth area and battlefield in North America, Europe and parts of Asia (Japan, Korea, Taiwan, among others). With the sale of personal navigation devices at an all time high and with increasing number of mobile phones with GPS capability, it will be an interesting area to watch. Some of the recent events such as Consumer Electronics Show in Las Vegas provided ample evidence of this.

There are many pieces of technology which make up this: better/cheaper devices, new value added services based on connected navigation devices, alternatives to GPS for location determination on the phone, CDMA vs GSM technologies and advances in mapping technologies.

Maps have come a long way in the last few years and the need for real time location-based information whether it be traffic or product inventory is acting as a catalyst. For a view of the situation of maps technology in Pakistan see this recent entry at Green&White.

Here’s a bit more on the recent industry events related to maps and navigation from TheDeal.com.

U.S. software giant Microsoft Corp. built up its arsenal in the battle against Google Earth with the acquisition Wednesday, Dec. 12, of U.K. online mapping service Multimap Ltd. for an undisclosed sum.

Microsoft’s purchase is the latest in a series of deals in the digital mapping industry. In October Nokia acquired U.S. car navigation software provider Navteq Corp. for $8.1 billion. Last month Dutch navigation device maker TomTom NV snared Tele Atlas NV, the Netherlands-based digital map maker, for $4.3 billion.

Seattle-based Microsoft said the acquisition would enhance its existing offerings such as Virtual Earth and offer future integration potential for a range of other services and platforms.

As more and more cellular phone makers incorporate the technology into their handsets, demand for digital navigation devices is expected to explode. California research group iSuppli Corp. valued the market at about $4 billion in 2006 and projects $16.5 billion in revenue by 2013.

We have seen a very active discussion about the total subscribers and what this growth means. The chart above shows the total subscribers added in 2007, based on PTA numbers. Consistent with previous reviews Mobilink and Telenor came out as winners. Paktel showed a sluggish growth for most of 2007 but picked up speed towards the end of the year. All the political unrest did not dampen the short-term growth and some will argue that the telecom voice and data usage increased because of the situation. In a way this sends a message that the risk taken by companies such as Telenor in investing in volatile emerging markets can pay off.

Here are the numbers and subscribers added in 2007 as percentage of the total. For example Telenor added 55% of its total subscribers in 2007.

Adil Najam has written an insightful and thought provoking piece on Pakistaniat.com about the real impact of mobile phone growth in Pakistan: SIM-Nation: 76.6 Million Mobile Subscribers in Pakistan? Could this be right? Is this good?.

Here’s an excerpt but please follow the link for full story. The comments are interesting too and the tendency is that “developmental effects have far outweighed any negatives that one might be able to bring up”.

As readers of this blog may recall, I wrote a series of posts about the economic and social impact of telecommunication technology growth in Pakistan.

Should we be really be impressed - in a development perspective - if the number of mobile subscribers are high in a developing country? It certainly signifies good business for the industry, but what does it say about the country and national development?

There are those who argue in the literature that the rapid growth of such services in developing countries signifies the failure of governments in providing essential infrastructure. This argument is far more valid in the water sector.

The point of all of this is to wonder whether cellphone uptake actually translates to an increase of net developmental productivity - i.e., are people able to do more and make more in terms of their livelihoods - or is it that it has become a new “necessity” and “cost.” (For example, “everyone needs a cellphone now because everyone else has it and not having one is a barrier to entry”). If, indeed, it is that a new “need” and “cost” has been created then that only means that the net “cost of living” has gone up. And, especially for the poor more and more of their disposable income is diverted to this “need” that may not be adding to their productivity or livelihood, but not having which would hurt them. This at a time when the cost of living is already high and economic survival at the individual level under stress.

WIRED magazine has a great story about how Apple created iPhone despite initial setbacks and shook the wireless industry. It is a fun read and I found the background to have many lessons - as one example, the first phone which Apple came up with (ROKR) was a dismal failure and the first prototypes were also disappointing. The main take away here is that there was a strong desire to innovate and change the basic game. Hats off to the team which pulled it off.

For those working on the iPhone, the next three months would be the most stressful of their careers. Screaming matches broke out routinely in the hallways. Engineers, frazzled from all-night coding sessions, quit, only to rejoin days later after catching up on their sleep. A product manager slammed the door to her office so hard that the handle bent and locked her in; it took colleagues more than an hour and some well-placed whacks with an aluminum bat to free her.

But by the end of the push, just weeks before Macworld, Jobs had a prototype to show to the suits at AT&T. In mid-December 2006, he met wireless boss Stan Sigman at a suite in the Four Seasons hotel in Las Vegas. He showed off the iPhone’s brilliant screen, its powerful Web browser, its engaging user interface. Sigman, a taciturn Texan steeped in the conservative engineering traditions that permeate America’s big phone companies, was uncharacteristically effusive, calling the iPhone “the best device I have ever seen.”

According to PTA released numbers the total mobile subscribers in Pakistan crossed 76 million. During 2006-07 the revenue of mobile industry was Rs.133 billion, an increase of 48% from previous year. The 4.12 billion US dollars of foreign investment poured in the telecom industry in the past year has been a major driver of this growth.

This is certainly a big achievement and PTA deserves a pat on the back. The challenge of course is to sustain this growth in a fair manner to all and not at the cost of the basic rights of consumers. Lets all remeber the basic point that consumers in Pakistan deserve good service at competitive rates. PTA must not allow the quality of service fall below reasonable standards. 

Due to the rapid growth of mobile subscribers, there has been talk of migrating mobile numbers from 7 digits to 8 digits. The study and planning in numbering scheme of mobile phones has been in works since 2006. Recently PTA, the telecom regulator, has announced and published information about the schedule of the implementation plan.

This plan was reviewed by the major stakeholders in June 2007 and a timeline of implementation in early 2009 was decided. The mobile number change is part of a larger set of changes in National Numbering Plan in Pakistan, which is under review. I wrote about the fixed line numbering scheme changes a while ago.

What is this change? A mobile number consists of 2 parts. Access code which is currently 4 digits (e.g. 0333) and subscriber number which is currently 7 digits (xxx-xxxx). The changes proposed will make access code as 3 digits and subscriber number as 8 digits.

Good thing for the users is that there’s no change in the number itself for Ufone, Telenor or Mobilink. For example 0300-123-4567 becomes 030-0123-4567. However there is an impact for certain Paktel users, Instaphone (they are in big trouble anyway) and SCO (service in AJK and Northern areas) users as some of the codes will be reallocated. For example SCO wants to use 0335 instead of 035-xxx-xxxx.

The mobile numbering scheme changes have been received with mixed reactions from the public, ranging from confusion, questions about the effectiveness and whats all the hype out. In a recent discussion at Telecom Grid Pakistan, various views were presented. However, there was a common theme that such changes should be least disruptive.

Part of the motivation for this comes from the near future 3G services launch. There are plenty of technical details which deserve a second post, so I will write again soon. However it is certainly better to do it earlier than later.

Updates from PTA are available on their website. Worth the effort? Read further for the reasons put forth by PTA.

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Telecenters have been a major source for telecom activity and for bridging the digital divide in developing countries. I came across a group called Telecentre.org which is focussed on helping communities and telecenters.  

In their own words Telecentre.org is a community of people and organizations committed increasing the social and economic impact of telecentres around the world. I ran a search on Pakistan and saw some interesting articles from the past couple of years. I’ll mention one story here about Pakistan Telecenter Initiative or PTI. As it is described on the site, PTI is a Civil Society Group carrying forward dialogues and actions in support of Pakistan’s upcoming massive rural Telecenter movement. This is interesting information which I was not aware of

Read on to learn a bit more about Telecenter.org, taken from the ‘About’ section of their site.

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As the new year starts research and media companies present their views on what the future holds. Over the next few days I’ll share some selected articles about the future of communication technologies. Here’s one from TMC.

The evolution of mobile devices to an open platform and the movement of Internet video into the mainstream are this year’s two macro trends that will have the greatest impact in the future, according to a report released on Monday by MultiMedia Intelligence.

This year marked a new transition of mobile devices into open platforms. Although it’s known for being a closed platform when it comes to allowing third-party applications, Apple’s iPhone started a new dynamic, and Google’s Android platform and a possible Java-based operating system are the next phase, MultiMedia Intelligence said in the report.

Another important development rounding out the macro trends of 2007 is Motorola’s recent investment in UIQ, a software platform based on the Symbian OS. In October, Motorola bought 50% of Sony Ericsson’s stake in UIQ, which is also the platform behind Sony Ericsson’s touch-screen smartphones. This means touch screens are likely to become a major focus for the phone maker.

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Looking at the comments on this site about “tower sites for sale” it appears that cell phone tower related  business transactions are a major contributor to the telecom sector in Pakistan. And this seems to be true for Asia in general. I came across this article from Financial Express, India:

Ugly steel towers, with oblong boxes stuck on their sides. No brand ambassadors and no branding either. But, as mobile telephony majors rush to expand their network across India, the 15-metre tall towers that pick up and relay signals from one place to the other are becoming one of the hottest business activities in the information and communication space. Even a year back, few among investment bankers would buy the idea that passive infrastructure like towers could create value for the shareholders of telcos. New technologies like WiMax could today add to the bonanza and widen the scope of the passive infrastructure business. The towers in future will not only be rented by GSM and CDMA service providers, but also telcos who adopt WiMax technology. With 1,20,000 tower sites in the country and a demand for a pan-India telecom footprint extending beyond the semi urban landscape, there would be an increase of at least 200% in the number of sites, industry people say.

Investments to the tune of Rs 66,000 crore wil be required for setting up an extra 2,20,000 towers over the next three years, going by the current cost of Rs 30 lakh for a cell site, according to estimates from Cellular Operators Association of India (COAI). If the number of wireless subscriber base in India is to reach 577 million by the end of 2017, the network would require 3,75,000 towers, given an average tenancy of 2:1, say Kotak Institutional Equities Research estimates. First, it was the third party independent service providers like GTL Infrastructure, who sensed a business in creating the passive telecom network. GTL hopes to have 25,000 towers in the country by 2011. At present, its towers are rented by five operators in several places, mostly in non-metro cities and semi-urban areas. And their business model does not stop at GSM and CDMA telecom service providers. “We hope that in future, internet service providers (ISPs) and WiMax vendors will also rent our towers,” says Rupinder Singh Ahluwalia, executive vice-president of GTL. Their plans include use of land near the towers to set up communication kiosks for e-governance, wherever there is an opportunity. Rolling out infrastructure in one of the world’s fastest growing telecom market requires heavy investments.

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