State of Telecom Industry in Pakistan

Here is part 2 of the 3-part series of interview with the Chief Executive Officer of Universal Service Fund, Pakistan. In this part Mr. Iftikhar explains about subsidies, financial allocations and the criteria/data used to select the region where USF will invest.

What is your budget and how do you apportion it for voice vs broadband?

The disbursement budget for the current year is more than 4 Billion Rupees but this is a misleading figure due to two reasons.

1. It shows the amount that will be disbursed and not the amount that will be committed by signing contracts with the operators. The committed amount is disbursed over more than one year as the projects take time to complete.
2. It must be understood that this kind of budget can only be indicative. The actual disbursement of funds depends on the subsidies determined through open competitive bidding. For instance last year we achieved our target of the number of Lots to be auctioned, however the subsidies demanded by the bidders turned out to be lower than our budget! For every 100 Rupees of investment, Operators asked 20 Rupees subsidy.

In a way this under “under-utilisation” of the budget was a good thing, in that the Operators’ stake was substantially higher. In the meanwhile this trend is undergoing change and the operators are increasingly asking for higher subsidies. As of now an investment of Rs. 5.3 Billion is taking place in those remote areas with only Rs.1.49 Billion USF subsidy.

As for its apportionment, let me answer your question by a pie char.

What criteria do you use to decide where to invest?

Our first priority is to go to unserved areas. We use data from different sources to determine which areas are really unserved. We take:
• topographic maps from Survey of Pakistan,
• satellite imagery from Suparco,
• village population data from Census Organization of Pakistan
• and finally telecom coverage from Telecom Operators

Based on this we gather the un-served areas into “Lots” and auction the Lots one by one.

In case of Broadband it was easier. We eliminated from our program, all those big cities where there is some broadband service available. Although we consider those cities to be under-served, we are not going into those large urban areas for the time being.

And in case of Optic Fiber again the decision was rather easy. We carried out a field survey to determine which Tehsils of the country do not have Optic fiber connectivity, which turned out to be 31% of the total Tehsils. That is where we have launched our programme.

The criteria as to which area to cover first, one tries to cover maximum unserved population in as short a time as possible. As in any endeavor we have are also learning as we are moving ahead. For example when we tried to auction the large Lot of Chaghi-Noshki in Baluchistan, no bidder turned up. So we broke up the very large Lots and also decided to first concentrate on Lots nearer to the served areas and then move outwards. Similarly in case of the project ‘Optic Fiber for all Tehsils’, we chose Sindh province first because that way we can cover maximum Tehsils with minimum KMs of Fiber cable – kind of low hanging fruits first.

It would be pertinent to mention here that all such proposals are discussed and debated in the Board where collective wisdom of Government as well as Private Industry is applied before such decisions are reached.

Let me add here that the level of support and help that we get from the Board Members is beyond what I ever expected – especially the Ministry and PTA. Without this we could not have moved ahead.