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Published on April 13th, 2008 | by Babar Bhatti

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Is Pakistan Ready For 3G?






Does it make business sense to introduce 3G in Pakistan at this time? PTA has been deliberating on this question for a while. Recently PTA asked major technology stakeholders (equipment makers, mobile companies) to share their view points on 3G licensing and roll-out. The presentations have been posted at the PTA website. Telenor CEO has talked to press about his views on 3G, covered here. Take a look at few points from a presentation by another one of the major mobile company. The argument presented is that conditions are not suitable for 3G in Pakistan and the data revenue potential does not justify investments needed for 3G. They recommend to either defer spectrum allotment or give partial spectrum at nominal cost. Can you guess which mobile operator is this?

3G Situation in Pakistan

  • Pakistan is a low priced voice dominated market. Industry is building voice capacity rather than enhanced capability
  • Pakistan Mobile Data Subscriptions Disappointing
  • Nominal GPRS subscriptions in the industry
  • ARPU uplift from these subscriptions is negligible
  • Multi-mode (GSM/UMTS) handsets are still costly
  • GSM market exploded due to economies of scale in the hand sets
  • GSM hand set is available as low as $25
  • Small percentage of 3G capable hand sets in the market
  • 3G non-voice mobile revenues are expected to be negligible
  • Localized content stimulates usage — Low literacy in Pakistan
  • No content available in local/regional languages

Spectrum Cost

  • Spectrum forms part of investment for an operator to roll out a 3G network
  • Five operators can be expected to invest over a billion dollars on initial launch
  • More cell sites would required to support higher data rates
  • Local content development is an uphill task

Option 1
Defer the allotment of spectrum for another 1-2 years (as per our recommendation May 2007)

Option 2
Award 5Mhz of 3G spectrum to all MNOs at nominal cost (similar to WiMax spectrum fee )

Why?

  1. Incentive to build and grow 3G services
  2. Justify high capex on roll outs
  3. Technology proliferation
  4. Affordable 3G services for masses
  5. Allocation of additional 3G spectrum at a subsequent date
  6. Operators keen to expand on 3G portfolio can bid
  7. Market foundation is laid
  8. Business case for further investments
  9. Strengthen operator capability to offer better QoS and advanced services


About the Author

Founder and Editor of TelecomPk.net



0 Responses to Is Pakistan Ready For 3G?

  1. Pingback: Tweets that mention Is Pakistan Ready For 3G? | State of Telecom Industry in Pakistan -- Topsy.com

  2. naeem says:

    when 3g introduce in pakistan
    3g has high speed

  3. tipu says:

    hell.respective sir,
    can u tell me whic company is providing 3g internet service on mobile phone.i have try to fring open in pakistan but possbile chat onley not voice ,i use there service u fone.thanks a lot ,pls if any inforamtion realted send me mail .thanks a lot

  4. 1. Incentive to build and grow 3G services
    2. Justify high capex on roll outs
    3. Technology proliferation
    4. Affordable 3G services for masses
    5. Allocation of additional 3G spectrum at a subsequent date
    6. Operators keen to expand on 3G portfolio can bid
    7. Market foundation is laid
    8. Business case for further investments
    9. Strengthen operator capability to offer better QoS and advanced services

    Answers to above question is that “Yes, we should have 3G in Pakistan” as Incentives are created to develop more revenue and jobs in the market. There are financial tools available in the Market like ” Financing under terms of Pay as You Grow and Pay as per utilization which doesn’t required much efforts to finalize your vendors and services. 2G era is ticking out with limited services and its time to invest rather wait for the destiny call. As per current strategy within Pakistan only licenses are available is for the operator in service so Roll-out are much faster before we realize that we will have the 3G services in Pakistan and benefit from them.

  5. Rashad Usama says:

    i don’t think that its the case of incumbents holding out against wimax…wimax is backed by some very huge companies, Motorola and Intel to name a couple..so im sure where 3G/UMTS groups are planning against it,then these companies definitely have a plan n they sure know how to play ball.. besdies that…yes its true wimax has been having alot of teething problems but seriously i think users wld still prefer wimax over 3G/UMTS or the mobile internet technologies..id rather have high speed internet at home n medium speed on my mobile for occassional use purpose..n i think motorola n intel both are developing cards which would enable laptops to avail the wimax.

  6. Nash says:

    But i’ve heard that wimax has some technical limitations and have practically seen that after, say, 200 meters from the tower it is line-of-site dependant and one experiences poor or no coverage indoors.

  7. Saleem says:

    Some time new cheap technologies gets failed just because of existing big giants. Same it seems with WiMAX. 3G/4G stake holders don’t want WiMAX in the market and they are trying their level best to make it flop, not because of that its pathetic or slow. just for their own gains. WiMAX allocated spectrum is far cheaper than 3G spectrum. WiMAX technology is able to operate at higher speed than 3G but UMTS group is fully trying to let it down by putting some licensing and some production hurdles. They won’t able to sell their products if WiMAX enabled mobiles and notebooks will be available at cheap rates. We can’t expect cheap 3G because it is expensive by birth. Spectrum allocation expensive, licensing expensive, equipment expensive so how it can be cheaper than WiMAX. but I’m afraid that 3G won’t allow it to grow freely. Their whole GSM and UMTS market will get suck by WiMAX. because who will talk through GSM then, if you can use broadband for talk also.

  8. Rashad Usama says:

    Nash You’re absolutely right in pointing out the factors above. without decent ROI’s and regulations the Mobile broadband won’t fly. But even as we speak the PTA is in the process of planning out 3G license scheme(in order to keep abreast with the international community).more with the current situation people in pakistan don’t use the services ofered except forthe voice service.so i guess its going to b a niche market for both 3G/4G as well as Mobile WimaX.

  9. Nash says:

    Well, i’ve heard plenty of blogs saying that WiMAX has not been successful and examples quoted as Buzz from Australia shut down their WiMAX business after investing huge.

    However, i think there are two different questions as under:

    Q1- What is the future of Mobile broadband?
    This question covers all the questions like, are we ready, what would be the use of Mobile Broadband, revenue and ROI etc. And this is the question to be addressed by Marketing & Strategic Planning people.

    Q2- Which technology to choose from available options (WiMAX, wiBRO, UMTS, etc) and why?
    This question should be addressed by people in the regulatory authority of the country or different consortiums as which is best for the subscribers and future ready.

    Also, i would say that there should be good reasons to bring Mobile Broadband or lets put it this way that we should make enough reasons to bring the technology home. For instance private & public sector organizations should take part in introducing Mobile Commerce and M Government sort of stuff.

    So much more to say but let me have your thoughts on the above first .

    Thanks & regards,

  10. Rashad Usama says:

    i think the basic question over here should be what end user benefits can 3G provide over wiMAX..technology wise.

  11. Omar Ahmed says:

    Interesting topic. However even the Ceo’s of major mobile companies have realized a few points that are not mentioned above.
    1. How many customers are pre-paid vs monthly billing.
    2. Cell phone cost is high due to retail markets
    3. US based providers i.e; t-mobile, verizion,sprint provide cell phones at reduced costs based on contract terms. Replacement phones are even cheaper.
    4. mobile packages provided in pakistan lack the attraction due to higher per min cost of calling and no proper packages are available to suit customer needs.
    5. The Mobile industry in minting money, but is not wanting to upgrade services.

    Anyways these are my thoughts on the subject.

  12. Babar Bhatti says:

    @Adnan – good point. Whats the use of technology if the environment is unsafe.

    @Bial – I also thought that pointing to lack of content was lame.

    BTW – this presentation was from Mobilink. Ericsson and Huawei gave very optimistic presentations about the future of 3G in Pakistan.

  13. liveunplugged@hotmail.com says:

    “No content available in local/regionallanguages”; so my question is to that CEO that who’s gonna make that? You or someone from Sri Lanka is going to show up and make Punjabi and Sindhi content for you? This is a ridiculous pointer to put.

  14. It’s better to improve law and order situation than introducing new techs liek 3G otherwise we won’t be able to take advantage of this high speed tech for common use applications while roaming around.

  15. Saleem says:

    I will select WiMAX option for high speed and low cost data service on mobiles. But question arise that how many mobiles or Laptops are yet capable to work under WiMAX. Few laptops are coming very soon in market but only one handset is expected in Q4 of 2008 i.e. Nokia 810 Tablet WiMAX enabled.

    3G is no doubt expensive technology. In this tough competition and low profit margins, companies can’t afford to invest huge for it. It requires purely new infrastructure and equipments i.e. for UMTS. Then user requires GSM/UMTS enabled handsets. GSM systems can only support GPRS/EDGE. for 3G, UMTS hardware is must.

    Due to high competition and low rates of DSL/WiMAX and GPRS, we can’t expect high earnings from 3G usage. Telecom can share WiMAX infrastructure of Wateen for facilitating in coming years. But WiMAX will become new threat because people are moving from GSM calls to WiFi and WiMAX calls. These are very cheap and free of cost between same software users. same like VoIP. So things are threatening for GSM companies. I even use Fring for calling from WiFi enabled areas to my friends and family through my mobile. and calls all over Pakistan for just Rs0.50 by one VoIP company. You need to just buy one WiFi enabled mobile and one wireless DSL (WiFi). happy Calling and Chat…!

  16. Quli says:

    With China mobile (huge revenue at the corp level) in the mix, I think option 1 is the way to go ie wait it out for a year before auctioning. But no more, since consolidation is bound to happen in the telco space and the best way to monetize the airwaves is to have plenty of competition.
    3G is going to come to Pak one way or the other ….the infrastructure based on copper is just horrible and with 3G being significantly more reliable for data than cable/DSL etc etc, it will catch on.

  17. Rashad Usama says:

    So the whole thing comes down to this. in order to establish a network where internet access can become “widespread”(lets not talk nationwide at this stage)and cheap to use we need either 3G or WiMax broadband(Mobile not fixed). and since WiMax isn’t exactly taking off or working properly..and we don’t hve licenses issued for Mobile WiMax then the next option comes to 3G..which is expensive in it own right and doesn’t seem suitable for pakistan..due to the reasons mentioned above.. so b/w wimax and 3g which option is better for us technology wise??

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