Pakistan Telecoms, Mobile, Broadband and Forecasts

A BUDDECOMM REPORT

PAKISTAN

TELECOMS, MOBILE, BROADBAND AND FORECASTS

18th Edition

Researcher: Peter Evans

Copyright 2012 Published 04 September 2012 Paul Budde Communication Pty Ltd Tel 02 4998 8144 – Int: 61 2 4998 8144 5385 George Downes Drive Fax 02 4998 8247 – Int: 61 2 4998 8247 BUCKETTY NSW 2250 Email: [email protected] AUSTRALIA Website: www.budde.com.au Pakistan - Telecoms, Mobile, Broadband and Forecasts

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Forecasts:

The following provides some background to our scenario forecasting methodology:  This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.  The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.  All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

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EXECUTIVE SUMMARY

The 3G fiasco has been an ominous cloud hanging over Pakistan’s otherwise energetic telecom sector

The progressive implementation of the Pakistan government’s reform plans over a number of years has triggered a period of strong growth in the local telecom market. Up until recently the energy and growth was predominantly in mobile services; as the mobile market moderates, the focus has shifted to broadband access in its various forms. In the meantime, there has been no significant activity in fixed- line services as originally intended and in fact subscriptions in this sector are in decline.

Earlier on Pakistan’s telecom market struggled with the transition from a regulated state-owned monopoly to a deregulated and competitive environment. The government initially focused on fixed lines setting out ambitious plans to increase fixed-line teledensity from 2.5% in 2002 to 7% (around 10 million fixed lines) by 2010. This target became impossible to achieve in time. After peaking at around 4% in 2008, fixed penetration had fallen to 3.5% coming into 2012. And, at the same time, the majority of these fixed lines were in urban areas. A more balanced distribution is certainly desirable in the longer term as 70% of Pakistan’s population lives in rural areas. Some good news in the fixed-line market came with the arrival of Wireless Local Loop (WLL) services and the licensing of a multitude of WLL operators. This technology has helped sustain what there is of a fixed-line segment. WLL services constituted around 50% of the total fixed-line subscriber base by 2011.

Meanwhile, the focus of the market changed; the whole telecom landscape in Pakistan having shifted to mobile services with a phenomenal expansion occurring in this sector from 2005/2006 onwards. Over the same planning period that the government was setting its fixed line target – from 2002 to 2010 – the number of mobile subscribers jumped from less than two million to 100 million. Interestingly, despite the significant tightening of the national economy during 2009 the mobile market continued to expand at an annual rate of between 5% and 10%. Subscriber numbers had increased to 120 million by early 2012. The mobile networks were already covering well in excess of 90% of the population and this coverage was continuing to be expanded.

While mobile penetration was around 70% and continuing on its growth path, internet penetration remained at relatively low levels coming into 2012. Broadband growth had been of particular concern with almost negligible growth for many years; finally, 2008/09 saw a promising upsurge in broadband subscriptions and this fresh growth pattern growth looked to be continuing, boosted by the spread of competition throughout the market and the increased adoption of wireless broadband solutions. By the start of 2012 broadband services made up around 40% of all internet subscriptions. Broadband penetration remained relatively low – still less than 1% - by that stage. For the wider view of the online market, although estimates vary, there were around 16 million internet users in the country by early 2012. This was a huge jump from around 0.5 million users a decade earlier. As already noted, the dominant mode of internet access remained dial-up for the moment, although this was most assuredly about to change.

Meanwhile, with slowing subscriber growth, mobile operators have started to shift their focus to value- added services. In this regard, the operators were not surprisingly keen to see the issuing of 3G licences. The government had started a process to assign these licences back in 2007. By early 2012 however there had been no licences issues. Delay after delay had occurred, much of which had not been properly explained. By May 2012 the regulator was saying that 3G licences were unlikely to be awarded until the end of 2012 when the long-awaited frequency spectrum auction would be held. The 3G fiasco has generally presented an ominous cloud over an otherwise energetic telecom sector in Pakistan.

Control of internet content remained a big issue in Pakistan coming into 2102. Back in 2010 the government directed that the monitoring of websites for ‘anti-Islam content’ be undertaken by the PTA, the telecom regulator. By March 2012, amid growing concern about greater restrictions on internet access in the country, the Human Rights Commission of Pakistan (HCRP), an independent body, said that already about 13,000 sites were inaccessible. The regulator said that the figure was closer to 2,000 sites.

Market highlights:  Despite overall slowing in the telecom market, Pakistan continued to grow its the mobile sector;  Mobile subscriber numbers were growing at around 10% annually in 2011/2012, modest growth indeed compared with the earlier boom years;  By mid-2012 there were around 120 million mobile subscribers for a penetration of close to 70%;  Five mobile operators were competing vigorously for a share of the subscriber base and the revenue, each claiming a healthy share of the market;  In a major disappointment for the local industry, Pakistan’s proposed auction for 3G licences continued to be delayed;  Pakistan’s broadband internet penetration still remained low in relative terms (only around 1% coming into 2012), there has been a significant surge in broadband services;  The growth in wireless-based broadband has been especially important, representing around half the subscriptions into 2012;  Growth in the country’s fixed-line market remained sluggish; fixed teledensity stand at less than 4% into 2011 with the numbers actually falling;  One positive factor in the fixed market has been the success of wireless local loop technology which was supporting half of all fixed subscribers and still growing.

Pakistan: - Key telecom subscribers – 2011 - 2012 Category 2011 2012 (e) Fixed-line services: Total number of subscribers 5.7 million 5.6 million Broadband: Total number of subscribers 1.8 million 2.5 million Mobile services: Total number of subscribers 113 million 125 million (Source: BuddeComm)

This report provides a comprehensive overview of the trends and developments in the telecommunications market in Pakistan. Subjects covered include:  Key Statistics;  Market and Industry Overviews;  Regulatory Environment and Development;  Major Telecom Players (fixed and mobile);  Infrastructure;  Mobile Voice and Data Market;  Internet, including VoIP;  Broadband (fixed, wireless, mobile);  Scenario Forecasts (fixed-line, mobile and broadband subscribers).

Peter Evans September 2012

Data in this report is the latest available at the time of preparation and may not be for the current year.

TABLE OF CONTENTS Chapter number: on page number:

1. KEY STATISTICS ...... 1 1.1 Country overview ...... 2 1.1.1 Background 1.1.2 Economy

2. TELECOMMUNICATIONS MARKET ...... 4 2.1 Overview ...... 4 2.2 Foreign Direct Investment (FDI) ...... 5

3. REGULATORY ENVIRONMENT ...... 7 3.1 Overview ...... 7 3.2 Background to development ...... 7 3.3 Regulatory authorities ...... 7 3.3.1 Ministry of Information Technology (MoIT) 3.3.2 Pakistan Telecommunication Authority (PTA) 3.3.3 PTA’s administrative actions 3.4 Telecom sector liberalisation ...... 9 3.5 Regulatory developments ...... 11 3.5.1 Restriction on number of SIMs 3.5.2 Operators accused of tax evasion 3.5.3 PTCL accused of anti-competitive practices 3.5.4 Dispute over origination charges resolved 3.5.5 Management of subscriber base 3.5.6 Special regions of Azad Jammu and Kashmir (AJ&K) 3.5.7 Third Generation (3G) licensing 3.5.8 National numbering scheme 3.5.9 Number portability (NP) 3.5.10 Infrastructure sharing 3.5.11 Security 3.5.12 Censorship

4. FIXED NETWORK MARKET ...... 17 4.1 Overview ...... 17 4.2 Pakistan Telecommunication Company Limited (PTCL) ...... 18 4.2.1 Overview 4.2.2 Background 4.2.3 PTCL and the regulation of tariffs 4.2.4 Financial performance 4.2.5 Privatisation of PTCL 4.2.5.1 Subsequent dispute 4.3 Other fixed network operators ...... 23 4.3.1 WorldCall group 4.3.2 TeleCard 4.3.3 Licensing in Azad Jammu and Kashmir

5. MAJOR OPERATORS...... 26 5.1 Overview ...... 26 5.2 Mobile operator statistics ...... 26 5.3 Mobilink (PMCL) ...... 27 5.3.1 Overview

5.3.2 Background 5.3.3 WiMAX 5.4 Ufone (PTCL) ...... 29 5.4.1 Overview 5.4.2 Background 5.5 Telenor Pakistan ...... 31 5.5.1 Overview 5.5.2 Background 5.5.3 Network development 5.5.4 Third Generation (3G) licence 5.5.5 Telenor’s Rabta Centres 5.5.6 Solar-powered network 5.6 Warid Telecom ...... 34 5.6.1 Overview 5.6.2 Background 5.6.3 Solar-powered network 5.7 Zong ...... 36 5.7.1 Overview 5.7.2 Background 5.7.3 Millicom’s exit 5.7.4 China Mobile takes control 5.8 Instaphone (Pakcom) ...... 39

6. TELECOMMUNICATIONS INFRASTRUCTURE ...... 42 6.1 National telecom network ...... 42 6.1.1 Overview 6.1.2 Fixed line statistics 6.1.3 Opening up of market 6.1.4 Rural services 6.1.5 Universal Service Fund (USF) 6.1.6 Mobile services 6.1.7 Fibre optic networks 6.1.8 Broadband networks 6.1.9 Payphones and Public Call Offices (PCOs) 6.1.10 Wireless Local Loop (WLL) 6.1.10.1 Payphone application 6.1.11 Next Generation Networks (NGNs) 6.2 International infrastructure ...... 52 6.2.1 International gateways 6.2.2 Pakistan-India link 6.2.3 Submarine cable networks 6.2.4 Satellite networks and systems 6.2.4.1 Paksat Project 6.2.4.2 Very Small Aperture Terminal (VSAT) networks 6.3 Infrastructure developments ...... 55 6.3.1 Voice over Internet Protocol (VoIP)

7. INTERNET MARKET ...... 58 7.1 Overview ...... 58 7.2 Background ...... 58 7.3 Major government initiatives ...... 59 7.4 Internet control and censorship...... 59 7.4.1 Government firewall 7.5 ISP market ...... 61

7.5.1 ISPs 7.5.2 Market developments 7.6 Internet and broadband statistics ...... 62

8. BROADBAND MARKET ...... 66 8.1 Overview ...... 66 8.1.1 Infrastructure development 8.1.2 Pakistan Telecommunication Company Limited (PTCL) 8.2 Digital Subscriber Line (DSL) ...... 68 8.3 Fibre-to-the-Home (FttH) ...... 68 8.4 Cable modem ...... 69 8.5 Wireless broadband ...... 69 8.5.1 WiMAX 8.5.1.1 Wateen Telecom 8.5.1.2 Mobilink 8.5.1.3 Telecard 8.5.1.4 PTCL 8.5.1.5 Other networks 8.5.2 Internet via satellite 8.6 Long Term Evolution (LTE) ...... 72

9. DIGITAL MEDIA / DIGITAL ECONOMY ...... 73 9.1 E-commerce ...... 73 9.1.1 E-commerce action plan 9.2 E-government ...... 74

10. MOBILE COMMUNICATIONS ...... 75 10.1 Pakistan’s mobile market ...... 75 10.1.1 Overview 10.1.2 Customer satisfaction 10.1.3 Background to development 10.1.4 Mobile statistics 10.2 Additional mobile licences ...... 79 10.3 Third Generation (3G) licences ...... 80 10.4 Regulatory issues and developments ...... 82 10.4.1 Number portability 10.4.2 Unregistered SIMs 10.4.3 Consumer rights 10.4.4 Licensing in Azad Jammu and Kashmir 10.5 Mobile voice services ...... 83 10.5.1 Prepaid 10.5.2 Satellite mobile 10.6 Mobile data services ...... 85 10.6.1 Short Message Service (SMS) 10.6.2 Multimedia Messaging Service (MMS) 10.6.3 Blackberry 10.6.4 Mobile TV 10.6.5 M-commerce / mobile banking 10.6.6 Innovation in mobile financial services

11. FORECASTS ...... 88 11.1 Forecasts – internet market – 2015; 2020 ...... 88 11.2 Forecast – fixed-line market – 2015; 2020 ...... 89

11.3 Forecast – mobile market – 2015; 2020 ...... 90 11.4 Notes on forecasting ...... 91

12. GLOSSARY OF ABBREVIATIONS ...... 92

LIST OF TABLES Table number: on page number: Table 1 – Country statistics – 2012 ...... 1 Table 2 – Telecom revenue and investment statistics – 2010 ...... 1 Table 3 – Telephone network statistics – 2011 ...... 1 Table 4 – Internet user statistics – 2011 ...... 1 Table 5 – Mobile statistics – May 2012 ...... 1 Table 6 – National telecommunications authorities ...... 2 Table 7 – Pakistan’s real GDP growth rate – 2005 - 2013 ...... 2 Table 8 – Foreign Direct Investment (FDI) in telecom sector – 2002 - 2011 ...... 6 Table 9 – ‘Fixed-line’ licences issued by PTA – 2011 ...... 17 Table 10 – Fixed-line subscribers by operator – June 2011 ...... 17 Table 11 – PTCL fixed wireline subscribers – 2000 - 2011...... 18 Table 12 – WorldCall’s WLL (fixed) subscribers – 2005 - 2012 ...... 24 Table 13 – WorldCall’s fixed wireline subscribers – 2005 - 2011 ...... 24 Table 14 – TeleCard’s WLL (fixed) subscribers – 2005 - 2012 ...... 25 Table 15 – Mobile operators, subscribers and annual change – May 2012 ...... 26 Table 16 – Mobile operators, subscribers and market share – May 2012 ...... 26 Table 17 – Mobilink (PCML) subscribers – 2000 - 2012 ...... 27 Table 18 – Ufone (PTCL) subscribers – 2001 - 2012 ...... 30 Table 19 – Telenor Pakistan subscribers – 2005 - 2012 ...... 32 Table 20 – Warid Telecom subscribers – 2005 - 2012 ...... 35 Table 21 – Zong subscribers – 2000 - 2012 ...... 36 Table 22 – Instaphone (Pakcom) subscribers – 2000 - 2010 ...... 40 Table 23 – Fixed lines in service and teledensity – 1991 - 2012 ...... 42 Table 24 – Fixed wireline subscribers – 2004 - 2011 ...... 43 Table 25 – Fixed wireline v. fixed wireless (WLL) subscribers – 2004 - 2012 ...... 43 Table 26 – Fixed wireline subscribers by operator and market share – 2011 ...... 44 Table 27 – Growth in Public Call Offices (PCOs) – 1999 - 2009 ...... 48 Table 28 – WLL subscribers – 2005 - 2012 ...... 50 Table 29 – WLL subscribers by operator and market share – March 2012 ...... 50 Table 30 – Internet users – 1995 - 2012 ...... 62 Table 31 – Internet subscribers – 1997; 2000 - 2012 ...... 63 Table 32 – Broadband subscribers – 2004 - 2012 ...... 63 Table 33 – Broadband subscribers by technology – 2012 ...... 64 Table 34 – Broadband subscribers and households – 2011 ...... 64 Table 35 – Total international internet bandwidth – 2004 - 2011 ...... 64 Table 36 – Broadband subscribers by type – 2009 - 2012 ...... 66 Table 37 – PTCL broadband subscribers – 2007 - 2011 ...... 68 Table 38 – DSL broadband subscribers – 2005 - 2012 ...... 68 Table 39 – FttH subscribers – 2007 - 2012 ...... 69 Table 40 – WiMAX subscribers – 2008 - 2012 ...... 69 Table 41 – Mobile subscribers – 1995 - 2012 ...... 76 Table 42 – Mobile operators, subscribers and annual change – May 2012 ...... 77 Table 43 – Mobile operators, subscribers and market share – May 2012 ...... 77 Table 44 – Mobile services revenue – 1998 - 2011 ...... 78

Table 45 – Overall ARPU across all mobile operators – 2002; 2004 - 2009 ...... 79 Table 46 – Mobile monthly ARPU by operator – 2009 ...... 79 Table 47 – Proportion of prepaid mobile subscribers – 2005 - 2011 ...... 84 Table 48 – Forecast internet subscribers – 2015; 2020 ...... 88 Table 49 – Forecast fixed line subscribers – 2015; 2020 ...... 89 Table 50 – Forecast mobile subscribers – 2015; 2020 ...... 90

LIST OF CHARTS Chart number: on page number: Chart 1 - GDP growth rate – 2005 - 2013 ...... 3 Chart 2 - Foreign Direct Investment (FDI) in telecom sector – 2002 - 2011 ...... 5 Chart 3 - PTCL fixed wireline subscribers – 2000 - 2012 ...... 19 Chart 4 - Mobile operators, subscribers and annual change - May 2012 ...... 26 Chart 5 - Mobile operators, subscribers and market share - May 2012 ...... 27 Chart 6 - Mobilink (PCML) subscribers – 2000 - 2012 ...... 28 Chart 7 - Ufone (PTCL) subscribers - 2001-2012 ...... 30 Chart 8 - Telenor Pakistan subscribers – 2005 - 2012 ...... 32 Chart 9 - Warid Telecom subscribers – 2005 - 2012 ...... 35 Chart 10 - Zong subscribers – 2000 - 2012 ...... 37 Chart 11 - Instaphone (Pakcom) subscribers – 2000 - 2009 ...... 40 Chart 12 - Fixed lines in service and teledensity – 2001 - 2012(e) ...... 43 Chart 13 - Fixed wireline vs. fixed wireless subscribers – 2004 - 2012 ...... 44 Chart 14 - Growth in Public Call Offices – 1999 - 2009 ...... 49 Chart 15 - WLL subscribers by operator and market share – March 2012 ...... 51 Chart 16 - Internet users – 2000 - 2012 ...... 63 Chart 17 - Internet and broadband subscribers – 2004 - 2012 ...... 64 Chart 18 - Broadband subscribers by type – 2009 - 2012 ...... 67 Chart 19 - Broadband, FttH and WIMAX subscribers – 2008 - 2012 ...... 70 Chart 20 - Mobile subscribers – 2000 - 2012 ...... 77 Chart 21 - Mobile operators, subscribers and market share – May 2012...... 78 Chart 22 - Mobile services revenue – 1998 - 2011 ...... 79 Chart 23 - Proportion of prepaid mobile subscribers – 2005 - 2011 ...... 84

LIST OF EXHIBITS Exhibit number: on page number:

Exhibit 1 – Long Distance International (LDI) licensees – 2011 ...... 10 Exhibit 2 – Local Loop (LL) licensees – 2011 ...... 10 Exhibit 3 – Wireless Local Loop (WLL) licensees and status – 2011 ...... 11 Exhibit 4 – PTCL subsidiary companies ...... 19 Exhibit 5 – Joint ventures and affiliated companies ...... 19

For a full overview of our information on Asia, see at www.budde.com.au, or other BuddeComm reports on the Asia market: Afghanistan Armenia Azerbaijan Bangladesh Bhutan Brunei Darussalam Cambodia China East Timor Georgia Hong Kong India Indonesia Japan Kazakhstan Kyrgyzstan Laos Macau Malaysia Maldives Mongolia Myanmar (Burma) Nepal North Korea Pakistan Philippines Singapore South Korea Sri Lanka Taiwan Tajikistan Thailand Turkmenistan Uzbekistan Vietnam

For a full overview of our Market reports on Asia, see:  Asia - Mobile Data, Wireless Broadband Market and Forecasts  Asia - Mobile, Broadband and Digital Economy Overview  Asia - Telecom Forecasts  Asia Fixed Broadband and Internet Market and Forecasts  Asia Mobile Operators

Asia “Statistics only” Report:  Asia – Mobile Communications Statistics (tables only);

Operators Subscribers1 Market share Brain Limited Union Communication Total (Source: BuddeComm based on PTA data) Notes: 1excludes fixed wireless subscribers.

For fixed-line market forecasts see chapter 11.2, page 89.

4.2 PAKISTAN TELECOMMUNICATION COMPANY LIMITED (PTCL)

4.2.1 Overview The Pakistan Telecommunications Corporation (PTC) was established in 1990. It was partially listed in 1994, with the government selling % of its stake to the domestic market. A further % was sold on the international market in the form of Global Depositary Receipts (GDRs). The company, which had remained 88% state-owned for an extended period after the initial flurry of privatisation activity, continued to be a major element in the government’s ambitious privatisation program. In 1996 became a publicly listed company – Pakistan Telecommunication Co Ltd (PTCL) – without being broken up either regionally or into different organisations.

In 2005 the Pakistan government sold a % stake in PTCL along with management control to United Arab Emirates-based Etisalat for US$2.60 billion, in what was the biggest privatisation sale in Pakistan’s history to that stage. See chapter 4.2.5 for more details of the privatisation process.

PTCL was the monopoly provider of all fixed-line telephony services in Pakistan over a long period of time. When issued with a 25-year licence in 1990, it was granted exclusivity on domestic and international fixed-line services until 2002. It was also the sole provider of the backbone transmission network in Pakistan. In the meantime, it had started offering domestic internet services and, through a 100% owned subsidiary, the all-important mobile phone service.

By 2011 PTCL’s focus had shifted to a ‘continued its strategy of innovation’, with the company having positioned itself as the leading integrated telecom services provider in Pakistan, offering multiple solutions to business and household market segments while extending vital services to other telecom operators in the country. The company said that it was seeking to ‘remain the leading and dominant integrated telecom service provider of choice for our customers throughout Pakistan.’

Table 11 – PTCL fixed wireline subscribers – 2000 - 2011 Year1 Subscribers 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2011 (Dec) (Source: BuddeComm based on PTA and company data) Note: 1For year ending June unless otherwise indicated

In August 2011 Omantel reported that its subsidiary WorldCall was likely to break even by the end of the year. The parent company said that WorldCall was already showing signs of improved performance following the ‘completion of US$ million in funding.’ Omantel said that WorldCall’s revenues from data services and EV-DO services had recorded % and % growth respectively, contributing % to WorldCall’s total revenues. The company had been able to reduce its net loss by % in 2011 due to its growth in the data business. Of the total capital funding, US$ million was being invested in improving company infrastructure.

Table 12 – WorldCall’s WLL (fixed) subscribers – 2005 - 2012 Year1 Subscribers 2005 2006 2007 2008 2009 2010 2011 2012 (Mar) (Source: BuddeComm based on PTA and company data) Note: 1For year ending June unless otherwise indicated

Table 13 – WorldCall’s fixed wireline subscribers – 2005 - 2011 Year1 Subscribers 2005 2006 2007 2008 2009 2010 2011 2011 (Sep) 2011 (Dec) (Source: BuddeComm based on PTA and company data) Note: 1For year ending June unless otherwise indicated

4.3.2 TeleCard Pakistani operator, TeleCard Ltd, announced in mid-2004 that it was about to enter the Pakistan’s fixed-line telephone market and was intending to invest more than US$ million over a 12-month period. TeleCard, which had been operating 45,000 public pay phones using WLL technology, was seeking to take advantage of deregulation to enter the fixed-line market.

TeleCard subsequently signed an agreement with Lucent Technologies for the supply of Third Generation (3G) CDMA2000 1x equipment and services for up to a million lines to boost the coverage and capacity of its network and enable it to introduce next-generation mobile services such as high- speed internet access. The company also signed to buy equipment from China’s ZTE Corp.

It was reported in late 2008 that TeleCard had selected France-based Augere as the contractor for the deployment of a WiMAX network in Pakistan. TeleCard said that rollout of equipment had commenced and commercial service would begin by end-2008. In addition to its fixed wireless voice service, the company had been operating a range of internet services under its Supernet brand, based on VSAT and pre-WiMAX Broadband Wireless Access (BWA) technologies.

As a consequence of a shorter range being allowed, WLL subscriber growth had been much slower than the operators had expected. A group of WLL operators, led by the country’s LDI carrier, DVCOM, brought a petition before the Lahore High Court asking it to direct the PTA to pay back WLL licence fees which, the petition claimed, were issued under false pretences. There was concern in some quarters that the WLL dispute was likely to do considerable harm to the image of the telecom sector in the country. At least half of the WLL licensees had sizeable foreign stakeholders that could well withdraw both from the joint ventures they were in and from the Pakistan market in general. The PTA had collected around PKR billion in initial licence fees for mobile services, long-distance international services, fixed local loops and WLL, a significant proportion coming from the WLL operators.

Huawei was awarded a contract by WorldCall in 2006 to deploy a CDMA WLL network in Karachi and Hyderabad.

After an increase of WLL subscribers in just four months, the PTA said in 2006 that the growth in WLL subscribers was triggered by the improved services of the operators. PTCL claimed the largest number of WLL subscribers at the time with , followed by TeleCard with WorldCall, which has been operating mainly in the Punjab region, had WLL subscribers, while Great Bear had

In 2009 the PTA awarded WLL licences to PTCL and Wateen for three regions of Azad Jammu and Kashmir (AJ&K) and Northern Areas (Nas). Two years after the deregulation of this area, the teledensity of AJ&K and Nas stood at %. Mobile subscribers totalled million.

Table 28 – WLL subscribers – 2005 - 2012 Year Subscribers 2005 2006 2007 2008 2009 2010 2011 (Apr) 2011 (Jun) 2011 (e) 2012 (Mar) (Source: BuddeComm based on ITU and PTA data)

Table 29 – WLL subscribers by operator and market share – March 2012 Operators Subscribers Market share PTCL (Vfone) TeleCard WorldCall Wateen Sharp Link Direct NTC Mytel Total (Source: BuddeComm based on PTA data)

In July 2010 PTCL reported its broadband subscriber base had surpassed the milestone. In addition, it had also increased the maximum download speeds available to its subscribers, introducing a new top speed of Mb/s, double the previous limit of Mb/s. The operator said it had automatically upgraded all of its existing customers to higher speeds, with those previously on Mb/s and Mb/s packages seeing their top level speeds upped toMb/s and Mb/s respectively, while maintaining the same monthly package charges.

Table 37 – PTCL broadband subscribers – 2007 - 2011 Month/year Subscribers 06/2007 06/2008 03/2009 06/2010 12/2011 (Source: BuddeComm based on company and industry data)

In March 2012 PTCL announced that it had expanded its CDMA EVO wireless broadband service to cover % of the country’s population, offering service in 180 cities and towns. As a result, PTCL customers could get EVDO Rev A download speeds of up to Mb/s. PTCL had also expanded coverage of its Rev B network to 70 cities offering speeds of up to Mb/s.

8.2 DIGITAL SUBSCRIBER LINE (DSL) DSL has become the major platform for supporting broadband internet access services in Pakistan. Around % of the broadband services in the country were DSL-based by 2007, according to the PTA. The proportion of DSL subscribers increased even further in 2008. With the boom in broadband services that started in 2007/08, DSL has continued to grow strongly. However, with the advent of wireless broadband access, its grip on the market has moderated somewhat. Around % of broadband subscribers were supported by DSL as of April 2012.

DSL has had a presence in the Pakistan market for over a decade. Micronet, a local provider of internet services, set up Micronet Broadband Ltd (MBL) in 2001 for the purpose of offering commercial broadband services in Pakistan based on the DSL technology. This followed the company being selected by PTCL to conduct a project under contract to work with the incumbent to set up a DSL service. MBL launched the first ever DSL service in Pakistan in 2002 using PTCL’s copper network and immediately started to expand its coverage area.

Table 38 – DSL broadband subscribers – 2005 - 2012 Year Subscribers 2005 2006 2007 2008 2009 2010 2011 2012 (Apr) (Source: BuddeComm based on ITU and PTA data)

8.3 FIBRE-TO-THE-HOME (FTTH) PTCL has been looking at ways to deploy fibre networks in order to tailor its access network to provide broadband services. The operator began a program to add Fibre-to-the-Curb (FttC) and Fibre-to-the- Building (FttB) capacity in the country, initially covering Karachi, Lahore and Islamabad.

© Copyright Paul Budde Communication Pty Ltd, 2012 68 Website: www.budde.com.au Pakistan - Telecoms, Mobile, Broadband and Forecasts Mobile Communications holders, but they would have a choice as to whether they launched 3G or 4G services. However, the licensing process continued to suffer delay after delay.

By mid-2011 the government was saying that it planned to issue the country’s first 3G concessions in October 2011; it was noted at the time that the state hoped that the sale would generate up to US$ in revenue. It was expected that in August 2012 the government’s Economic Coordination Committee would give the go-ahead for an open auction for the 3G licences. The number of concessions to be made available would be decided by the amount of 3G spectrum available. The PTA was to advise the MIT on the availability of spectrum.

Reports were emerging in September 2011 that the government had formed another working group tasked with resolving the ongoing issues delaying the sale of 3G mobile concessions. The cabinet committee previously appointed by the prime minister with the task of examining the auction of 3G spectrum decided that a subcommittee should be formed to study the 3G matter in more depth. It was understood that there were continuing differences of opinion between the state and PTCL. PTCL claimed that it was agreed that the country could not sell any new spectrum concessions for at least seven years after the proposed PTCL stake sale set for March 2013. The state had argued that 3G licences were not new concessions but rather an extension of existing services; it also had a different interpretation of the time limit for the sale of licences agreed as part of the PTCL stake sale. The consensus was that the 3G auction remained in limbo, with slowing subscriber growth and shrinking ARPU seeing network investment levels dwindle.

In November 2011 the prime minister gave approved in principle to a policy for 3G in the country and asked the cabinet committee to table the policy in cabinet for final approval. Under the policy, the proposed 3G spectrum auction was to be open to new international players as well as existing operators and three blocks of 10MHz each were to be offered for auction. If a new player wins 3G spectrum, they would not be able to launch operations before March 2013, when the moratorium on new licences was set to expire. To encourage competition new players as well as existing players were to be invited to compete for the existing, now defunct, licence that was once owned by Instaphone. The plan also provided for more spectrum for 3G or 4G services to be made available around March 2013 so that services are able to start shortly thereafter. The auction process will be supervised by the Ministry of Finance (MoF) and the MIT, the PTA and the Frequency Allocation Board (FAB).

The MIT directed the PTA in December 2012 to carry out the auction of 3G concessions ‘within the next three months.’ The ministry had set up a high level committee to supervise the tender with the Finance Minister as chairman.

By January 2012 the PTA was confirming that the long-delayed auction would take place in March. The regulator confirmed that three 3G concessions were to be made available, each valid for a period of 8 to 15 years and that the government had set a base price of US$ million for each licence. A deposit of US$ million from those bidders approved to take part would be required in advance of the auction. The authority said it was expecting ‘10 to 15 potential investors in the initial bidding process.’

It was reported in February 2012 that the proposed 3G auction had ‘attracted the attention’ of at least five foreign operators. were all understood to have expressed interest. Of the local players, had already indicated their intentions to bid. The WiMAX operator Qubee has also expressed interest, although it would probably be seeking a partner for the bid. In the meantime, Pakistan’s prime minister gave assurances that the government would ensure fair competition and transparency in the upcoming auction of 3G concessions in response to accusations that the tender would be anti-competitive. The National Assembly Standing Committee on Information Technology had questioned the process, suggesting that it favoured existing operators. The PTA responded by saying that if the government had not restricted the entry of new players, it would breach an earlier agreement with Etisalat, and would face litigation.

The 3G licensing process hit another roadblock in March 2012 with the PTA announcing that the pre- bid meeting was being delayed, due to what it described as the ‘great interest shown by operators through their representatives in World Mobile Congress.’ The regulator said that the extra time was for the operators to evaluate the emerging situation and give them time to plan.

In January 2012 RIM said it would defend the legal privacy rights of BlackBerry users after a judicial commission in Pakistan ordered copies of smartphone communications in a scandal probe. The company was reacting to a report that a Pakistani commission was seeking the records as part of a probe into an unsigned memo purported to ask for Washington’s help to rein in Pakistan’s military. The highly controversial memo was allegedly an attempt by an aide of President Asif Ali Zardari to enlist the US military’s help to head off a military coup in May 2011. The commission had directed Pakistan government officials to obtain the BlackBerry ‘record of conversation’ between certain key persons. RIM said in a statement: ‘We are guided by appropriate legal processes and publicly disclosed lawful access principles in this regard as we balance any such requests against our priority of maintaining the privacy rights of our users.’

10.6.4 Mobile TV introduced the first mobile TV service to Pakistan in 2007. The service initially offered both prepaid and postpaid subscribers a mix of news, entertainment, music and sports channels such as Al-Jazeera, ABC News, TV 1, Indus Plus, Indus Vision, Cartoon Classic, MTV-Pakistan, Channel G, Filmazia, Waseeb, AWT Khyber and KTN.

10.6.5 M-commerce / mobile banking Mobilink noted in early 2008 that it saw m-commerce services such as mobile banking and money transfer as valuable tools for boosting penetration in emerging markets such as Pakistan. The view was that while these services were not directly revenue-generating, the availability of such financial services drives users to sign up for a mobile phone in the first place. The operator then generates revenue through the usual voice services.

In the meantime, the operator had committed to participating in a development project with the GSMA’s Development Fund aimed at providing female health workers in Pakistan with mobile handsets. The Lady Healthcare Worker scheme was designed to give mobile healthcare workers a means to communicate with local hospitals, ambulance services and so on, as well as helping spread the availability of mobile phones through the shared access method. The scheme was also a catalyst for income generation, since it enabled the women involved to sell airtime to people in remote villages who would not otherwise have access to mobile phones.

Under the pilot project, by early 2008, after it had been running for three months, Mobilink and the GSM Association (GSMA) had equipped female healthcare workers with mobile handsets. They were given a low-cost handset bundled with a prepaid card from Mobilink with airtime worth per month. Mobilink said it aimed to extend the project to women, once the pilot phase has been completed. The operator was also working with Nokia on a low-cost handset at around a price point. It was noted that the free of airtime applied only for the pilot. A commercial model had yet to be developed, with the partners emphasising that any projects undertaken required sound business models.

In August 2009 Pakistan’s first SMS-based Secure Mobile Payments Technology was launched in Karachi by AKNMTECH, a mobile value-added services provider. The initiative was designed to enable more than 94 million mobile consumers to interact with their respective financial institutions and conduct mobile transactions in a simple, reliable and secure form through SMS.

In June 2012 announced that , one of Pakistan's largest banks, had chosen the to offer mobile financial services to its customers. This will allow to integrate mobile banking capabilities into its banking product range. It planned to especially target the remote rural areas where access to banks, ATMs and the internet remains limited. In addition to was also launching mobile banking services in Pakistan for