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The Regulator and The Rise of The Local Telecom Industry

  • July 1, 2014
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Pakistani Telecom Industry’s comparison to a massive, breathing organism such as the dragon is, in fact, an apt comparison. Given the number of years, the industry has stretched to unbelievable proportions, and continues to do so, as can be seen preserved in the annual report FY 2012 – 2013 by the Pakistan Telecom Authority (PTA). 

The following is a summary on what was important from that publication.

Introduction

Two decades ago, it was inconceivable to visualize how a ‘walky-talky’ (the mobile) or something like the ‘Internet Explorer’ could act as the provider of so many a livelihood in the country; that or becoming the face of many a billboards swarming the country – from banking on celebrity endorsements, to attaching to the FMCG bigwigs such as Pepsi, and the like. ‘Connecting people’ – the byline of the popular mobile-maker, Nokia, is succinct in summing up what Telecom sector is to the country; nestled in the responsible arms of the PTA.

The PTA annual report made a number of significant revelations this year. The first being, that despite the absence of PTA members and Chairman for a great part of the year, the body continued to work with ease and efficiency. The problems stated by PTA with regards sale of unregistered SIMs or signal interference from India and Afghanistan were solved. The former, by limiting sale of SIMs for 5 SIMs per NIC; also the installation of biometric verification completed in August of 2014 helped a lot, and the latter was resolved, by highlighting the issue in front of the concerned ministries. PTA also carried out a survey to ascertain the quality of customer services which is talked upon in length in the relevant section of this summary prepared by IG in Pakistan. In honor of the 1996 reorganization Act, it is the responsibility of PTA to ensure the quality of services are being provided to its 188 million population and 128.93 million cellular mobile subscribers

To list down a number of key developments:

  • Blasphemous, derogatory content was removed from websites, about15, 380 sites to count. 
  • Telecom economy thrived in the year 2012-2013. The teledensity increased to 75.21%, revenue from the Telecom sector reached Rs. 124 billion.  Rs. 124 billion went to the National exchequer while investment reached US $472 million. 
  • Broadband showed 30 % growth with about 2.72 million subscribers. PTCL leads the broadband market. 
  • Mobile banking was heavily encouraged. Unprecedented growth in m-banking agents from 26,792 to 64,716 occurred. Growth in m-wallet accounts has been 126.4 % increasing from 1.4 million to 2.4 million. 
  • It received 31, 266 complaints against telecom operators, 98% of which were fully redressed.

  • New Services Introduced by PTA

Top priority has been given to the launch of next-generation wireless networks and services. It is for this reason that the services have been currently given up for auction. Biometric verification services were also installed in August of this year. This was important development to prevent cases of identity theft despite the high costs, both in capital and operating counterparts. Also, PTA carried out surveys on SIM sale and verification systems, to assess the ground situation to make sure that the CMOs were compliant with PTA’s rules and regulations. 

Quality services were carried out nation-wide in all of PTA offices, and with Broadband providers and users to ensure that the services provided were of the best quality were PTA compliant. Against some ‘Key Performance Indicators,’ the survey results showed a compliance of practices. Additionally, compliance in the time resolution of the broadband operations with regards complaints was strongly adhered to, with 99% complaints resolved by PTA – an outstanding feat, without a doubt.

Furthermore, PTA conducted its first ever QoS Survey for General Packet Radio Service (GPRS)/Enhanced Data Rate for GSM Evolution (EDGE) of Mobile operators.

A great emphasis on mobile-banking services was highlighted upon. In a newsletter by SBP, it was shared that at a workshop organized by the World Bank, advantages of the mobile banking were talked shared and its advantages elaborated upon, thus making a case for its free dissemination to the masses.

A fresh review of broadband tariffs was carried out in comparison with countries such as India, Bangladesh and Sri Lanka; however, subsequent discussion revealed that there was no need for any revisions. A streamlining of processes, by merging market trends, together with the international best practices was reviewed for what the tariff card for the future should hold. 

  • Telecom Sector: Contribution to the Economy

With the new government’s arrival into the picture, it plans to end energy woes, and increase the taxation net up by Rs. 2,475 billion for next year. Teledensity increased from 71.73% to 75.2%. The government revenue from Telecom increased to Rs.440.20 billion in the FY 2012-13 with a growth of about 7.0%. 

The Telecom sector is the highest contributor to the National Exchequer putting together Rs. 119 billion/ year for the last five years. The fiscal year 2012-13 received Rs. 124 billion from the Telecom sector.

Investments have somewhat dwindled, with Telecom operators, becoming more established now than a decade ago. It is for this reason that the figure on investment has reached US$451.40 million, a 47 % increase from the previous year.

Foreign direct investment remained negative, denoting a large number of capital outflows, than inflows. This is likely to change with 3G auctioning of licenses, we here at IDG in Pakistan can only hope. The auction is to take place next month, for which the licenses will have longevity  for about 15 years.

  • Telecom in AJK & GB

Making Telecom available to AJK and GB is the job of Special Communications Organization (SCO). After the 8th October earthquake, the government asked for the deregulation of telecommunication in AJK and GB and for companies to come in and expand on the telecommunications in the mentioned peripheries. 

  • Consumer Protection and Complaint Handling

PTA makes it a point to redress customer complaints as swiftly as possible to make sure the end user experience of using that service is in no way, hampered from the management’s end. Telecom consumers can register their complaints through ‘online complaints’ management system,’ email, telephone or conventional mail. The point is to remedy complaints in the minimum time possible.

Of the 33,310 complaints received during the previous year, 98% complaints were resolved and abut 99% of complaints against the Telecom operators were resolved.

The fault in Telephone services was seen to be the most popular complaint – as can be seen from the above graph – jumping from 5931 complaints to 8065 complaints from the previous year.  

IMEI number is unique to identify GSM, WCDMA, and iDEN mobile phones, as well as some satellite phones. It helped in locating stolen phones. Following is a glimpse into the number of IMEI that have been blocked and unblocked – a total of 73,474 IMEIs were blocked and 3,334 were unblocked and 5,057 IMEIs this year.

  • Mobile Payments

Over the years, PTA has tried to bring up the number of m-wallet account-holders. This is important as the statistics on financial availability is partially limited to only about 10% of the populace and 3% women. 

Besides Easypaisa and Omni (a product of United Bank Ltd.), there have not been many other models. It is only during FY2012-13, Mobilink’s Mobicash, CMPak’s Timepay, and Ufone’s Upaisa were launched.

More than 96% of all m-wallet banking transactions are carried out through m-wallet agents. The vast array of services include fund transfers from account-to-account (A2A), person-to-person (P2P), account-to-person (A2P), person-to-account (P2A), and bill payments, merchant payments, mobile top-ups, cash-in and cash-out deposits, loan repayments, donations, balance inquiry etc.

The growth of mobile agents increased to 141.6%, and the m-wallet account holders to 126.4%. No doubt the increase in these statistics has resultantly been from the presence of new players, namely, Easypaisa and Omni.

As of March 2013, Easypaisa is the market leader with market share of 46%, followed by Mobicash 28%, Omni 17% and Timepey 9%. Easypaisa has 50% share in the total m-wallet accounts followed by Omni with 48% account. 

New players will have to work at vying customers towards their services, just as the Telcos did for their calling services initially, say we. The plus side to this from the point of view of the mobile agents is that the industry is raw, and more open to new players.

It for to understand the usage and adoption of ‘m-payment services’ in Pakistan better, that a household survey was conducted. Taking the sample of 4,940 households in all the provinces and rural/urban population, the survey yielded the following results:

  • Lack of awareness about m-payments
  • Lack of education about the importance of m-payments
  • Lack of different avenues for outreach should be made available for inducting the ‘unbanked population

In this regard, m-banking model m-pesa of Kenya has been looked upon as a good example, having reached more than 66% households, says the PTA report.

Conclusion

Important facts to remember about the Telecom Industry from PTA Report FY2012 – 2013: 

  • Revenue increased by 9% from the previous year, and by a third during the last 5 years.
  • Teledensity has increased by 3.3%. 
  • Number of cellular subscribers has also increased.
  • The Telecom sector contributed Rs. 119 billion a year between the FY09 to FY13.However its contribution has decreased by 6.5 % 
  • Investment increased FY13 by 47% from the previous year. 

Mobile banking and 3G services are the buzzwords from this year’s PTA report. It is likely to catch up with the prosumer soon, as can be seen in the 3G licensing auction: the highlight of this year’s spring festivities in March to come, as well as the ‘m-banking’ services that has been taken up as the cornerstone by the government in much the same vein as the sobriety of the man hugging his chicken laying gold eggs. 

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  • Broadband Gazette
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  • Pakistan telecom
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