ISLAMABAD: As the government’s efforts to roll out 5G mobile phone connectivity pick up, telecom companies are reluctant to enter the race for a paradigm shift.

On Wednesday, the government constituted an advisory committee to auction 5G telecom services across the country.

The high-level committee — headed by Finance Minister Shaukat Tarin — would consist of 13 members, including Minister for IT and Telecommunications Syed Aminul Haque, Minister for Science and Technology Shibli Faraz, and Minister for Industries and Production Makhdoom Khusro Bakhtiar.

Other members include the adviser on trade and investment, secretaries of finance, IT and law, Pakistan Tele­communication Authority’s (PTA) chairman, the executive director of the Frequency Allocation Board and officials of key institutions, according to notification shared with the media.

Resentment by telecom operators signals limited participation in auction process

The PTA will hire a consultant to work out the details of the auction process.

However, there is a difference of opinion over the auction not only among telecom operators but also among the ministries.

Sources in the law ministry said the IT and Telecom ministry supported the idea of releasing the additional spectrum for 5G at low rates, whereas the finance ministry supports the idea of pitching an intense competition among the telcos during the auction to fetch a high value.

5G (or fifth generation) is a new technical standard for wireless networks that promises faster speeds; less lag, or “latency”, when connecting to the network; and the ability to connect many devices to the internet without bogging it down. 5G networks will ideally be better able to handle more users, lots of sensors and heavy traffic.

Before we can all use it, wireless companies and phone makers have to upgrade. Phones need new chips and radio antennas to work with the new network.

“After all formalities are completed, the telcos stay away from the bidding process, which was witnessed in the last spectrum auction,” a senior official of the law ministry said.

However, responding to a query, IT minister Aminul Haque said the experience of the last spectrum auction showed that there was a need for continuously engaging telcos.

“We want to keep all the options open and we will keep the TORs [terms of reference] of 5G license flexible because the 5G launch will benefit the country’s economy and its people, and the telecom companies will also enter the new horizon of technology,” the minister said.

On the other hand, telecom operators have expressed concerns over the high cost of introducing new technology after heavy investments in the purchase of a licence.

Jazz Pakistan CEO Aamir Ibrahim said 5G required fundamental changes in both investment strategy, spectrum policy and deployment as well as much higher upfront investment costs along with capital expenditure — the money used by a company to buy, maintain or upgrade its fixed assets, such as lands, buildings, vehicles, plants, equipment, technology, etc.

Mr Ibrahim even hinted that launching 5G might be a wasteful idea. “If there was a demand for faster internet, we can provide that through a more robust 4G infrastructure,” he said.

Similarly, a senior executive of another telecom company highlighted that Pakistan had introduced new taxes on telecom consumers, which had reduced their spending on the internet and telephony.

“The average revenue per unit was around $8 a decade back which has dropped to $1.50 now, whereas the exchange rate was hitting the investments of companies on infrastructure,” the executive said.

Published in Dawn, February 10th, 2022

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