Pakistan eyes 5G amid forex curbs

By Staff Reporter | The Express Tribune Sep 4, 2023

Pakistan’s ambitious plans to introduce 5G services within the next 10 months are facing scepticism from the telecom industry, which contends that foreign exchange restrictions and economic challenges present formidable obstacles to such a rapid rollout.

The industry argues that foreign exchange constraints have already forced the shutdown of numerous factories across various industries, including recently established smartphone assembly plants. In this economic environment, allocating billions of dollars for 5G equipment and expensive handsets—out of reach for the majority of Pakistanis—poses a substantial challenge, industry insiders argue.

One significant concern raised by the industry is the requirement to pay spectrum fees in dollars rather than Pakistani rupees, adding further hurdles to the introduction of 5G in Pakistan.

Operators, therefore, find it challenging to build a compelling business case for 5G, even if spectrum allocation were provided without cost, industry officials contend.

Chief Executive Officer of Jazz, Aamir Ibrahim, commented on the issue, noting that Jazz conducted a successful test and trial of 5G in Pakistan in 2020 and continuously explores new technologies while closely monitoring global 5G deployments. However, he emphasised that innovation must align with relevant use cases and consider consumer affordability at scale.

Ibrahim believes that, at present, the true potential of 5G technology is better suited for advanced enterprise use cases, such as remote surgeries, industrial production management, autonomous logistics, and other cutting-edge systems, beyond its application in retail broadband access.

He stressed, “With almost half of our population still offline, including 20% of Pakistanis living without any telecom coverage, the foremost challenge for us right now is to swiftly roll out a fast and robust 4G internet across the country.”

As an advocate of ‘smartphone in every hand’ and ‘broadband in every home,’ Ibrahim stated that Jazz has been extending mobile broadband connectivity to the remotest corners of the country, with investments exceeding $10.4 billion, including approximately $1 billion in recent years, primarily under its ‘4G for All’ initiative.

For most customers, accessible, dependable, affordable, and high-speed internet is the primary concern, not the distinction between 4G and 5G. With the average 5G-enabled handset priced above $250, it becomes a luxury that the majority of the population cannot afford, he said.

Ibrahim emphasised, “Our priority as a country should be to prioritise providing affordable and robust internet access to all citizens instead of introducing technologies that cater to a limited elite group.”

Participating in a spectrum auction, acquiring spectrum, and then facing challenges due to foreign exchange constraints in procuring the necessary devices and equipment for network rollout can be counterproductive. This situation became apparent after the last spectrum auction in late 2021. Within months, withholding tax on essential telecom and internet services increased from 10% to 15%, and later in the year, handset and equipment imports faced restrictions, severely impacting telecom operators’ ability to expand connectivity and maintain reliable services.

Similarly, PTCL Group President and CEO, Hatem Bamatraf, expressed limited enthusiasm about entering the 5G auction process when questioned during a news conference at PTCL headquarters a few months ago.

Outgoing CEO of Telenor Pakistan, Irfan Wahab Khan, also indicated in a media interview that Pakistan may not be ready for 5G services in the next few years and should instead focus on enhancing 4G services nationwide.

The industry’s consensus is that addressing telecom sector concerns and the prevailing “digital emergency” should take precedence. This entails addressing the surge in business costs, largely attributable to the policy of pegging telecom spectrum prices to the US dollar. Once these pressing issues are resolved, the industry suggests that Pakistan can explore next-generation technologies.

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