State of Telecom Industry in Pakistan

When compared with cellular phone growth, Broadband has been slow to take off in Pakistan. However the last two years show some progress  in terms of growth (a little over 20K subscribers per month), more choices of services in more places and most importantly a significant drop in cost for broadband access (~Rs.1200 per month on average). Another welcome trend is to move towards unlimited broadband.

PTCL has taken the lead with its DSL and EVO offerings while WorldCall, Mobilink Infinity, Wateen / WiMAX, Qubee,  NayaTel and Wi-Tribe have also offered their services.

According to PTA, “broadband subscriber base grew by 146% adding 245,727 subscribers during July 2008 – June 2009, while broadband connection charges for 1Mbps connection dropped below Rs. 1000. There were 413,809 Broadband subscribers in June 2009 as compared to 168,082 in June of 2008.”

At the current rate of broadband growth we can cross the half-million mark by December 2009. We need to get to 1 million much faster.

Daily Times recently wrote about broadband, excerpt below.

The Sustainable Development Policy Institute’s (SDPI) Study Group on Information Technology and Telecommunication in its 56th meeting discussed the problems that hinder broadband growth in Pakistan. Relevant stakeholders participated in the meeting. Wahaj ul Siraj of NayaTel and Zamir Bhatti of Wi-tribe reviewed the existing policy and infrastructure sharing issues.

Read more »

Universal Service Fund of Pakistan continues its initiatives to award substantial funds for rural connectivity in Pakistan. Recently USF awarded telecom contracts worth Rs. 1.25 Billion for providing Broadband Internet in the un-served urban areas of Hazara Telecom Region (HTR) with PTCL and Wateen Telecom and Optic Fiber connectivity to un-served tehsils of Central Balochistan with Wateen Telecom. Read more »

Alcatel-Lucent today announced that Nayatel is preparing to deploy the first gigabit passive optical network (GPON) in Pakistan. This blazing fast network will provide its customers with the most advanced triple-play services – such as high-definition television, innovative telephony services and ultraband Internet access. Nayatel’s Pakistani customers can expect the new network to be up and running by the end of 2009. Wahaj us Siraj, CEO, Nayatel said:

In 2005, Nayatel was the first operator to deploy a fiber-to-the-home (FTTH) network solution in South Asia, and today we have once again pioneered the Pakistani market by becoming the first adopter of GPON technology in the country.

With Alcatel-Lucent’s industry-leading GPON solution, we will be able to offer our customers a whole new range of next-generation, ultraband applications that leverage our network’s true gigabit speeds. All in all, we will soon be able to offer our customers a service experience which was once only dreamed in this part of the world.

“Nayatel’s GPON deployment in Pakistan, will enable their end-users to truly experience the power of next-generation triple-play services,” said Vincenzo Nesci, President of Alcatel-Lucent’s business in the Middle East and Africa. “This contract highlights Nayatel’s continuous confidence in our solutions and expertise,” he adds.

According to the latest MRG IPTV Market Leaders report , Alcatel-Lucent dominates the global IPTV Access market with a 41% market share (four times the market share of its nearest competitor). In its report, MRG confirms that Alcatel-Lucent is the only vendor focusing on all four (geographic) regions, and is deployed in 10 out of the top 25 IPTV service providers worldwide. From an FTTH perspective, Alcatel-Lucent has more than 90 fiber deployments ongoing worldwide, with a mix of GPON and point-to-point roll-outs.

In the first funding of its type, Universal Service Fund of Pakistan (USF) provided contracts worth Rs. 1.4 Billion in total, for providing Broadband Services in the un-served urban areas of Faisalabad Telecom Region (FTR). PTCL and Wateen Telecom won this round of contracts: PTCL will provide 72,500 broadband connections and Wateen Telecom will provide 16,500 connections. The  Faisalabad telecom region comprises of districts of Faisalabad, Jhang, Sargodha, Toba Tek Singh, Khushab, Bhakkar and Mianwali, excluding the served city of Faisalabad.

Readers of this blog may recall the earlier posts that we did to highlight and appreciate the work by USF and its leadership. Universal Service Fund (USF) is made up of contributions by telecom service providers of Pakistan. In the last decade, Pakistan has made impressive progress in providing voice telephony services crossing 60% tele-density, but broadband proliferation in the country is still very low and there are less than 300,000 broadband connections in the country. Furthermore, almost all these connections are concentrated in around 15 big cities of the country. Universal Service Fund (USF) is working to bridge that gap.

USF has ambitious and comprehensive plans to improve lives through broadband and connectivity. Read more information from the USF press release:

CEO of USF, Parvez Iftikhar, informed that FTR, has 56 towns and cities of various sizes with numerous potential broadband users like, hospitals, distance learning centers of Open University, Banks, NADRA centers/kiosks, Government Offices, Libraries, Courts, Industries and various other institutions, in addition to a population of more than 3 Million that could benefit. He further informed that a major highlight of this project will be the establishment of more than 250 Educational Broadband Centres in all the High-Schools and Colleges in these towns and cities, besides more than 100 Community Broadband Centres will be set up which will provide Broadband to those who cannot afford their own computers. He acknowledged the tremendous cooperation, help and support of the Ministry of IT and PTA, without which this landmark could not be achieved.

CEO USF also informed that bids for the next three similar projects have already been called through Press and Websites for the areas around Multan, Hyderabad and Mansehra. These will be followed by more projects till the whole country is covered. Moreover, bids for three more Projects of Basic Rural Telecom and two of Optic Fiber expansion in Baluchistan are also awaited.

According to PTA numbers, Pakistan had just over 170,000 broadband internet subscribers at the end of July 2008, up from 65,000 in March 2007. This number excludes mobile internet users on EDGE or GPRS. Digital subscriber line (DSL) and hybrid fibre coax (HFC) remain the most popular broadband technologies, as shown below. It is estimated that there were 2800 FTTH (fiber to the home) and 20,000 WiMAX users at the end of July 2008. 

A clear digital divide has existed within Pakistan as coverage and provisioning has been mainly limited to large urban areas. Karachi, Lahore and Islamabad are the best served cities. Since 2007 PTCL adopted aggressive strategy for DSL growth and by 2008 PTCL expanded its broadband DSL services to about 130 cities. However, Pakistan’s fixed-line infrastructure is still quite limited. A Ministry of Technology (MOITT) report on broadband estimates that all existing copper can support hardly 500,000 broadband users over a period of 3-5 years.

Universal Services Fund (USF), which subsidizes broadband in under-served areas, has been working diligently on a number of initiatives. The hope is that USF subsidy for broadband will help to close the digital divide. Read more about USF work here.

Then there is Mobilink’s Orascom’s LinkDotNet broadband service, at competitive rates (for instance, Rs.1200 for 512 kbps, unlimited download). Although limited in coverage, these are positive developments. I am pleased that the prices have dropped to affordable levels. There are student discounts available as well.

Another significant trend is that wireless broadband services have expanded significantly in the last 12 months.

WiMAX is expected to account for a growing number of broadband connections in the future. In the first 4 months of the launch, Wateen signed up nearly 10,000 customers. However due to initial issues with billing etc, there was considerable churn reported. Mobilink started the second commercial launch of WiMAX in Karachi by the name MobilinkInfinity. It has been estimated that about a 1000 customers have been signing up for this service per month.

Current estimates are that there are around 50,000 broadband wireless users in Pakistan. Wordcall Evdo service, Zong’s EDGE through USB modem and similar services by other mobile network operators provide further choices, though these are a bit pricey for average Pakistani consumer. Wireless mobile broadband is poised to be the next hot area of growth. If and when 3G arrives, it will be another boost to the wireless broadband sector.

Updated 11/28/08: Tee Emm commented below about the informal local area networks relying on cheap optical fiber cables passed over utility poles with or without permissions (typically on the basis of ’street power’). It is estimated that these so-called ‘desi networks’ are serving around 100,000 households all over Pakistan. This is an important part of Pakistan’s broadband sector which has been overlooked.

Projections for growth
The MOITT report includes an optimistic forecast based on the USF subsidy for fixed and wireless broadband. According to this forecast, in 2008-2009 the fixed broadband users will grow to 250,000 and wireless broadband will be 150,000. This excludes commercial LANs and WANs. I believe that the actual numbers will be within 20% of these estimates. We will know when PTA releases the information in 2009.

Recently I switched DSL broadband service at my home in Defence (DHA) Lahore from Wateen to Link dot Net. I wanted to share the reasons for making the switch and my experience with Wateen over the last few months. I am quite happy with my current experience with link dot net but I had to go through a few months of pain to get there. I hope that others can use this post as a helpful guide.

The Abu Dhabi Group launched Wateen Telecom in Pakistan in the year 2007. It claims to have the most wide spread of services throughout Pakistan. This company is providing their customers (in DHA Lahore) with Internet, telephony and cable television. There are other wide spread activities that they offer such as online gaming, digital television etc. Outside of DHA they are providing their customers with WIMAX and Telephony.

In year 2008, Wateen Telecom was well established in the market and was catering to a sufficient number of customers in Lahore. But soon after their beginning this company was not providing with sufficient quality of the product that they promised earlier on. This is also clear from the comments on the previous posts about Wateen on TelecomPk.net.

I signed up for Wateen’s DSL service in March. I paid Rs.1500 and got the CPE. The problem started with the billing. There was no bill for the first few months, perhaps because Wateen did not have a billing systemin place. The first bill hit me with a surprise because it was a combined total of three months. There are other hidden charges such as the modem they provide, they charge for it on the monthly basis. But the most regular complaints Wateen Telecom is dealing with are of the overcharging and details of what so ever the customer has down loaded and how has he downloaded. There is no record available to the customer how much internet is available to him, nor does the company seize the account after the download cap has been breached out of the limits for particular package.

There is a huge communication gap between the franchises and the main offices. There are number of complaints still lined up, hundreds of customers yet to be answered. Most of the customers had not paid their bills of subsequently bigger amounts, because no one is ready to accept that they have over used so much of internet. Wateen Telecom has over invested in Lahore and the time is close that it will become a major flop in the industry.

Other then Wateen Telecom if we see the other competitors in the market, such as World Call, PTCL and Link dot NET, among them all the most suitable DSL broadband Internet provider is Link dot Net. Choosing Link dot Net is surely a safe and secure investment. With the most suitable rates in the market you get unlimited downloads. Whereas Wateen Telecom is providing with download cap of 2 GBs/ 4 GBs depending on the package. World Call provides cable in internet, the money they charge at the time of the installation is not affordable for customers like students etc. PTCL has fair rates and number of packages including DSL broadband, cable Television and telephone, but the services provided is not at all up to the standards.

Among these entire Link dot Net is providing with the latest gadgetry at the lowest prices in comparison with its competition and is strongly increasing its market share. The cost is a total of Rs 1300. In which they provide you with 512kbps with unlimited downloads. The modem has a built in wireless router and can be connected to WLAN and operated round the house. There is no need of a cable connection and meters worth of cable entering the room, what you need is just a PTCL connection and on that line you can connect your modem. The performance rocks! I am completely satisfied with the customer services and my choice.

In  a recent interview with the media, Zouhair Khaliq speaks about Mobilink’s future expansion and investment plans and recent standing of the company among mobile and data service providers. Excerpts are presented below, full story here. As I have written before, Mobilink has been successful in 2 strategic directions. It has maintained its top position in mobile market by adding wireless subscribers. Secondly it has diversified into the broadband and data services market by acquiring Internet Service Providers such as DanCom, WOL, DVCom etc . Overall Mobilink continues to be a strong player and a good profit source for Orascom, the parent company.

In fibre optics, Pakistan Telecommunication Limited (PTCL) had been the only company that owned an optic fibre backbone. Mobilink has successfully introduced competition through the introduction of a nationwide network. Mobilink’s optic fibre backbone provides the perfect platform to Mobilink for connecting its customers nationwide with highest level of voice and data quality with more reliability.

Deployment of the national backhaul stands completed with full protection, making Mobilink’ optic fibre backbone fully protected/redundant. By providing last mile connectivity Mobilink has positioned itself as a one-stop shop for meeting all communication requirements of enterprises and individuals. The optic fibre network currently covers 6,500 kilometres and will be increased to cover another 2000 kilometres very soon.

“We are envisaging sustainable growth in Pakistan. With mobile penetration still at around 43 percent, the room for growth is immense. The growth is not only limited to mobile telephony, as there are huge opportunities in other fields like broadband (optic fibre, DSL, WiMax), LDI etc. This coupled with the enabling environment being provided by the Pakistan Telecommunications Authority ensures an excellent future for this sector,” he said when asked to comment on the company’s future plans in Pakistan.

I am sharing a piece about WiMAX in Paksitan, which I wrote for All Things Pakistan. As this is an overview, some of the information here may already be in my previous WiMAX posts.

Pakistan’s telecommunication industry – mobile communication in particular – has made impressive strides in the last few years after deregulation. However broadband growth in the country has been very disappointing – there are less than 100,000 broadband users in Pakistan. The open competition observed in mobile industry has not been replicated to broadband. Reasons include high prices, control of PTCL over bandwidth resources, policy issues, lack of infrastructure and legal disputes.

Enter WiMAX. Simply stated, it’s a relatively new standards-based wireless technology which is intended for large coverage areas on the order of several kilometers (instead of a few hundred meters, as is the case with Wi-Fi).

With base stations transmitting signals and some equipment at customer location, it promises fast bandwidth for both fixed locations and mobile users. In this backdrop, Pakistan made headlines in 2006 when Wateen announced plans to work with Motorola to rollout Mobile WiMAX, the largest network of its kind in the world.

Is WiMAX (Worldwide Interoperability for Microwave Access) the right technology for developing countries? In other words, will this new technology deliver the promise of broadband at affordable prices?

WiMAX comes with many theoretical advantages but its potential is yet unproven. Without getting too technical, it is purpose-built for Internet (IP) communication and is based on standards (as opposed to other proprietary solutions) endorsed by a respected world standards body, the Institute of Electrical & Electronic Engineers (IEEE)*.

Read more »

In my last post I referred to an article about broadband prices in terms of average salaries. As readers pointed out the numbers there were not a good representation of broadband costs. In case of Pakistan the $106 figure for 100kbps was too high. The fine print mentioned that the data used in Wired illustration was from ITU. I am sure it outdated, and the broadband prices have fallen significantly in the last year in Pakistan. There are other considerations as well which were not taken into account in that comparison.

For one, broadband prices are not fixed in a country but vary. As shown in the chart below, based on the OECD data, the range can be significant. (Source)

Second, there are many other factors which should be taken into account when comparing the broadband prices for different countries. A recent report from the UK communicaitons regulator OFCOM writes about this with the title:

The complexities of quantifying broadband prices

A recent OECD report compared the lowest prices for broadband, on a cost per Mbit/s basis, across 30 countries, of which the UK ranked 16th. The UK data came from three ISPs (BT, HomeChoice and Telewest). As such it excluded pricing data from several leading LLU operators which are gaining market share as a result of their low-priced offerings. The report also looked at broadband prices in isolation, despite the fact that so many consumers now buy broadband as part of a bundle of services.

In the OECD’s analysis, Japan, which has implemented fibre to the home (FTTH) offering speeds of up to 100Mbit/s, had the lowest cost per Mbit/s. However, it is difficult to make a direct comparison of broadband packages between countries; differing topographies and population distributions mean that a service which is economically viable in one country may not be in another, due to the level of infrastructure investment required. UK
broadband providers have not yet seen a rationale for the rollout of FTTH, meaning it is unlikely that the UK will be able to challenge the cost per minute of those nations with FTTH in the near-to-mid term.

There are also problems with using cost per Mbit/s as it fails to take into account that many consumers have yet to see the need for broadband speeds in excess of those already available in the UK.

Although international comparisons of broadband offerings and prices, such as the OECD report, can be useful, more complex analysis, taking into account service bundling and other points of service differentiation (such as data caps) is required.

Sources:
OFCOM Report from UK (Part 3 of the pdf reports)
OECD Report – Over 100 pages PDF

FTTH (Fiber To The Home/Premise/Business) is the new emerging technology for voice, data and media to which home users or commercial institutions in Pakistan can now look forward to. The idea is to replace the existing copper media in order to remove maximum dependency from PTCL network in general and to meet the demand for higher bandwidth with minimal disconnections, latency and security issues in specific. A related benefit is providing “one window solution” for data, voice, media & entertainment at affordable prices.

Some players have taken initiatives in this regard. Key players who have started or laid Optical Fiber Cable (OFC) are Multinet, Wateen Telecom, Mobilink, TWA, Nayatel and Brain Tel. TWA is focused on international connectivity through IPLC (International Private Leased Circuit) over SMW-3 & SMW-4, however they have also laid backbone fiber for Mobilink for domestic connectivity. As a result consumers are and will be enjoying advantages of low LDI tariffs. Nayatel is also offering data, voice and media services over FTTH but they are geographically focused in Islamabad market till yet. Multinet is one major infrastructure player laying 4500Kms Optical Fiber Backbone across Pakistan and also enjoys international connectivity with massive 40% share in SMW-4 through its investment arm Telecom Malaysia. Besides this Multinet has also laid fiber optic redundant rings in Karachi and Lahore. These OFC rings are also called Metronet. Multinet is serving corporate segment on Metronet since last two years.

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This post is first in a series in which IPTV services in Pakistan will be discussed.  First an introduction to IPTV: in simple terms IPTV is television content that, instead of being delivered through traditional formats and cabling, is received by the viewer through the technologies (IP) used for computer networks. IPTV provides multimedia services via a broadband connection with the help of a set-top box (STB) which resembles a traditional cable box. A single connection (fiber optic, copper or cable) coming to your premise can serve phone, TV and Internet service – terms such as FTTH or FTTP are used when fiber optic cable is being used for higher bandwidth transmission.

Why IPTV? IPTV is an imporant piece of the Triple Play puzzle. Many telecom companies are using it to create a sticky bundle for customers, the idea is that if a customer gets all services from a provider he or she can be offered a better deal and therefore is less likely to switch providers. I, for one, use bundles at home and find it convenient to have one bill and one phone number for customer service.

Triple play is also great for offering enhanced and converged services (not all are feasible, though) such as :

• TV and video services such as video-on-demand (VoD), subscription, live TV channel lineup packaging and scheduling, and network-based digital video recorder capabilities
• Additional “blended” communications applications such as get an alert of phone call on your TV, text chat, live traffic information (even using your cell phone as a remote – seriously!)
• Personal media applications such as uploading of photographs and video clips and sharing of music and video content across multiple in-home devices

What is the situation of IPTV in Pakistan’s market today? It is all about broadband availability and affordability and till now Pakistan has miserably lagged behind on this. I am hopeful that things will change for better in the next 2-4 years. The policy and regulatory framework is set by PTA. Pakistan Electronic Media Regulatory Authority (PEMRA) monitors and regulates the electronic media and it issues IPTV licneces as well.  I know about the following companies which can/will offer IPTV: PTCL, Wateen and Nayatel. There is little information available about PTCL plans (see some discussion here) but it is likely that they will offer IPTV over DSL using technologies from various foreign vendors (see below); for Wateen I’ve previously written here. Recently Brain has also advertised limited launch of IPTV service.

According to some resources PTCL may launch IPTV service on 23rd March 2007 to pilot users -with a broader launch to 20,000 subscribers in the first half of this year. In terms of its strategy IPTV must be a top priority for PTCL. It all comes to execution and creating a value package. PTCL launch is supported by Chinese telecom equipment giant Huawei and Irdeto, the Netherlands-based content security company. Huawei will provide the servers and set-top boxes (see Hua wei’s IPTV architecture below) and Irdeto will provide content security solution.

The Irdeto IPTV security solution integrated into the Huawei IPTV system provides for a full video product and service offering, including broadcast TV, video on demand, PVR and Time Shift TV. Within the Irdeto IPTV security framework, content is securely stored and distributed across any broadband IP network and the corresponding content rights can be managed on an individual subscriber and/or device basis.

Read more »

Triple play made its way to Pakistan. Triple Play service is a marketing term for the 3 services: high-speed Internet, Video (TV, Video on Demand) and telephone service – all over a single broadband connection. Wateen, PTCL and Nayatel are a few examples for which services are already or soon to be available in some parts of Lahore and Islamabad. The important question is if these services will be affordable and reliable?

Wateen’s triple play offering was recently unveiled with its services for DHA Lahore, scheduled for commercial launch in January 2007. With all the digging work going on in DHA, it will be a relief for the public. According to the press release by Wateen:

This project will provide DHA residents access to a breadth and depth of 21st century telecommunication and media services through fiber optic and wireless WiMAX networks. Services provided will include innovative telephony calling plans for local, nationwide and international routes, video conferencing/video telephony, true broadband internet (both fixed and wireless), DVD quality TV viewing and Value Added Services such as security & surveillance and interactive gaming.

Pakistan Telecommunication Company Limited (PTCL) was awarded the country’s first IPTV operating licence in November 2006 and will be an major competitor. PTCL has yet to announce a timetable for rollout of the service. “We have some exciting plans that we will be announcing soon,” was all PTCL CEO Mohammad Bamakhrama would tell local press. According to discussion forums, PTCL will use Alcatel IPTV solution which is based on partnership with Microsoft.

Alcatel (NYSE:ALA) also helped NayaTel  of Pakistan to supply the region’s first fiber-to-the-home (FTTH) solution to deliver a high bandwidth triple play (voice, video and data) services to over 30,000 subscribers in the capital city of Islamabad. More on this here. Sample rates for Nayatel’s Internet service are:

Now that we have these services available to select few, let’s monitor their success rate in 2007. Price is the main factor here and the one-time cost of the equipment (i.e. ONT) is likely to be the hurdle. If companies can asborb the equipment price in exchange for a contract, it can speed up adoption.