The Final Word

The Pakistan telecoms market has been attracting the attention of investors and operators in the Middle East region not just because of the phenomenal growth taking place in the mobile space there, but also because of the pro-active role being played by the national telecoms regulator to promulgate the vibrant market. CommsMEA speaks to Major General (retired) Shahzada Alam Malik, chairman of the Pakistan Telecommunication Authority regarding his role in helping sustain the boom.

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By  Tawanda Chihota Published  April 4, 2007

|~|Major-General-200.jpg|~|The chairman of the Pakisatn Telecommunication Authority, Major General (retired) Shahzada Alam Malik believes a light regulatory should be applied to nascent technologies.|~|Statistics highlighting the extent of the growth and success being enjoyed by at least five of Pakistan’s six mobile operators need no introduction; such is the spectacular levels it has reached in recent years. Overall teledensity in Pakistan hit 24% in June 2006, according to the ITU, a 15% increase over penetration rates during the same period in 2005. The majority of subscribers derive from Pakistan’s increasingly dynamic mobile market, which during summer 2006 accounted for 84.6% of Pakistan’s overall telephone connections, a 15% leap from the same period during the previous year, according to the Pakistan Telecommunication Authority (PTA). Due to ongoing economic prosperity Pakistan’s total telecoms revenue for the period 2005-2006 grew 30% from the previous fiscal year, reaching an overall revenue figure of US$3.2 billion. The telecoms sector is now the largest direct contributor to Pakistan’s foreign direct investment (FDI), drawing US$1.7 billion foreign investment since 2003 and surpassing the US$1 billion mark over 2005-2006, according to the ITU, compared to US$494 million the previous year. In total the telecoms sector brings in 54% of Pakistan’s overall FDI, a 53% increase compared to 2001-2002. According to the PTA, the number of mobile phone subscribers in Pakistan reached 48.21 million in December 2006, with a mobile density of 31%, an increase of 11.43 million from July the same year. The last six years have seen the industry enjoy an average growth rate of 124%, and currently adds approximately 2.1 million subscribers a month.Analysts have forecast the number of mobile telecoms users in the country could realistically touch 110 million by 2011. "Teledensity increased by about 120 % during the last year,” says Major General (retired) Shahzada Alam Malik, PTA chairman. “Today telecoms services are accessible to more than 78% of the Pakistani population at very affordable rates. Almost every fifth Pakistani has a fixed or a mobile phone, and if we look at the mobile sector penetration, every month an average of more than 2 million cellular subscribers are added showing a growth rate of 170% in just one year.” The scope of investors in the telecoms sector showcases its attractiveness, with foreign mobile entrants Warid Telecom and Telenor Pakistan having entered the market in spring 2005; joining mobile industry leader Mobilink, which is owned by Orascom Telecom; Etisalat-backed Ufone; Paktel and Instaphone. Operators and regulator agree that the addition of any more players to the market would be detrimental to its continuing successful expansion, and market leader Mobilink, somewhat predictably, actually foresees a period of consolidation, resulting in the reduction of long-term players in the markeT to just three or four. “Mobile operators have already sufficient competition among each other,” says Malik. “Introduction of any new operator would really hamper the growth and would have a negative implication on the operators from both a financial as well as commercial point of view,” he asserts. Furthermore, Pakistan’s Cabinet Committee for Regulatory Bodies (CCRB) has put a watch hold on the telecoms sector for another seven years, clearly indicating that sufficient competition has already been introduced into the sector and hence further competition is not required for the said time. So competitive jostling is the order of the day in Pakistan’s vibrant mobile market, and the issue of the introduction of mobile number portability (MNP) is a development the mobile operators have been awaiting. The policy was supposed to have been introduced in December 2005, but a series of bureaucratic delays have seen that timeline slip, and the regime was finally introduced March 23. ||**|||~|Pakistanhand200.jpg|~|The number of mobile subscribers in Pakistan is growing at more than 2 million a month, and is forecast to reach 110 million in 2011.|~|“PTA is implementing MNP, which is another effective tool for creating competition in the cellular mobile market. Likewise we have also given guidelines for mobile virtual network operators, which will also create competition among the operators,” Malik states. In the lead up to the introduction of MNP, the Pakistan MNP Database (PMD), the joint venture set up by the Pakistani mobile operators to manage number portability on their behalf, signed a contract with Telcordia to implement its clearinghouse services. The PMD is set to have a 14 member dedicated staff, with the entire project costing Rs. 4-5 billion (US$66 million – US$82 million) with US$10 million –US$12 million contribution from each mobile operator. PMD will utilise Telcordia’s Number Portability Clearinghouse solution as its centralised repository for number porting. The solution automates ordering, provisioning, notification and administration and allows service providers to rely on the same set of rules for handling port requests, so number exchanges can occur quickly and accurately. In addition to providing the Telcordia Number Portability Clearinghouse solution to the PMD, a number of the mobile operators have also selected Telcordia for their own number portability requirements. The operators have selected the Telcordia Number Portability Gateway solution, which provides a single, operator-based control point for mobile and fixed-line operators to manage the complex interfaces, message processing and transaction data associated with number portability requirements. Pakistan’s 52 million mobile subscribers were able to start utilising MNP on March 26, and with the launch of the MNP facility cellular mobile operators will be able to process porting requests from the recipient operator to the donor operator after completion of the consumer’s porting request. The whole process can be completed within four working days after which the database of both the operators ia updated electronically to implement the MNP facility. Malik and the PTA also remain undaunted by emerging technologies such as WiMAX and voice over IP (VoIP), the regulation of which has caused some consternation across parts of the Middle East. The current licensing regime in Pakistan is “technology neutral”, Malik explains, meaning a licensee can use any technology including VoIP to provide services to its customers. Therefore VoIP as a licensed service can be provided by the country’s licensed telecoms operators including long distance & international, wireless local loop and by call centres under the Call Centre Policy. However, the IP bandwidth provided by ISPs/data network operators/DSL operators is for ‘data’ only and cannot be used for ‘voice’, that is, for making calls. “The PTA believes that VoIP is a nascent technology hence should be under minimal regulation so as to encourage ICT in the country,” Malik asserts. The Pakistani government is placing a large emphasis on the development and uptake of broadband access and a major hurdle accounting for the slow growth of this technology has been the exorbitant prices involved with its services, Malik strongly suggests. Thus the PTA issued a determination subsidising the rate of broadband services for consumers and a court recently dismissed the PTCL’s plea against the PTA’s determination. “In view of this development, the incumbent has been asked to bring down its tariff structure in line with the PTA’s determination and we hope that this reduction in rates will accelerate the growth of broadband usage in the country, which today stands at around 60,000 subscribers and growing,” Malik comments. ||**||

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