Muhammad Arif Sargana Director (Economic Affairs) Pakistan Telecommunication Authority Sept, 2016 Islamabad, Pakistan Affordable BB Services o Fast Track right of way o USF to fund BB access in un-served areas o Fast Fiber roll out Availability of Spectrum o Immediate auction of spectrum in 2100 & 850 MHZ o Spectrum Reframing o Spectrum availability for digital Microwaves Suitable Backhaul o Improve access to national On-line Services o Diversity of routing o Load sharing on international capacity Competition in Retail BB ◦ Framing Sector specific Competition Rules ◦ Incumbent obliged to provide last mile infrastructure ◦ Availability of Wi-Fi Hot spots ◦ Encourage the development of contents Market Research Organizations (BMI, Gallup, Ericsson Research Lab, etc) International organizations (ITU, GSMA, World Bank, etc.) HH with Computers - 19% HH with Internet access - 24% ICT Skills - Who can ◦ Copy or moving files - 60% ◦ Emails with attachments - 45% ◦ Transfer file b/w PCs - 25% ◦ Using basic formula - 23% Wide-spread overage of cellular mobile Teledensity in Pakistan services in provinces of Pakistan Fixed Local Loop Cellular Mobile 43% of rural population of the country where 3G and 4G LTE service is available. 79.6 75.1 80.0 71.8 1.7 70.9 71.8 68.2 1.7 70.0 1.7 62.8 1.5 1.5 1.8 1.7 60.0 50.0 Percentage 40.0 76.5 71.7 68.4 64.8 69.1 69.0 30.0 60.7 20.0 10.0 0.0 1.6 1.7 1.7 1.4 0.4 0.3 0.3 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Jul-16 • Most people in Pakistan have access to basic voice telephony, mostly using mobile phones • Moving into an age where mobile use is about more than circuit switched voice and SMS • Deployment of Fibre (Rural/Urban) 88.0 86.0 86.0 84.0 82.0 81.5 80.0 Percentage 78.0 78.0 76.0 74.0 2013 2014 2015 Addition of 31.8 million mobile broadband 40,000,000 subscribers since the launch of 3G and 4G LTE services: more than 1.3 million additions per month . 34,544,581 34,544,581 35,000,000 32,415,339 32,415,339 30,966,581 30,966,581 30,000,000 24,810,240 24,810,240 25,000,000 21,186,585 20,000,000 16,885,518 16,885,518 15,000,000 Total Broadband SubscribersBroadbandTotal 10,000,000 3,795,923 3,795,923 5,000,000 2,721,659 2,721,659 2101315 1,491,491 900,648 900,648 413,809 413,809 168,082 168,082 45,153 45,153 26,611 26,611 - 35.0 31.8 29.5 30.0 27.9 25.0 22.9 20.0 18.0 15.0 13.5 12.1 10.0 7.7 3G/4G Subscribers (In million)(In Subscribers 3G/4G 5.0 3.7 1.9 0.0 Jul-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Jul-16 Cellular Subscribers growth 139.9 133.2 140 128.3 120.2 114.7 120 108.9 99.2 94.3 100 88.0 80 63.2 60 34.5 Million SubscribersMillion 40 12.8 20 5.0 0 Extensive Data Usage on 3G Networks 3G shares % 2G shares % Voice 3% 87% Data 97% 13% 2G 3G 4G Total 45,000 39821 40,000 33,995 35,000 29,765 4G Launch 28,535 30,000 23,980 24,434 25,000 21,932 18,790 17,942 20,000 3G Launch 14,841 InTerraBytes(TBs) 15,000 12443 11614 9,594 8,634 10,000 6903 6,704 8,089 4,448 1243 1322 3,503 4,701 5,000 2578 2,392 2,837 2,583 2,954 1,243 1,322 1964 1,887 363 996 2,536 3,133 2,857 3,196 63 143 266 - 1,601 691 Jan-14 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Jul-16 (Fixed-broadband subscriptions) 1,600,000 1,506,251 1,479,129 1,366,905 1,400,000 1,200,000 1,079,023 1,000,000 800,000 600,000 400,000 200,000 - 2012-13 2013-14 2014-15 2015-16 Diffusion of PCs and Internet access devices Very low digital literacy in an otherwise large population Less digitization of the economic activities Local content availability Limited provision of broadband connectivity to public facilities and offices Web Content, applications (“apps”) & services E-Government Law and Regulatory Policy ◦ Upgrade of Licensing ◦ RF Spectrum Infrastructure policy ◦ Common access/competition /subsidy Policy coordination to underwrite ISP demand in education, health, administration Skills and capacity development 1. Much more ambitious goals – towards e-inclusion across all sectors of the economy 2. Reaching rural areas by commercial companies, especially mobile 3. Common access and competitive infrastructure needed 4. Funding – USFs, direct budget/stimulus & PPP’s 5. USF is a key financing instrument 6. Competitive tender to build new backbone &/or access infrastructure 7. Stimulate Private Demand in the ICT Sector – e.g., PC initiatives, industry & educational initiatives, local services 8. Can be used effectively for demand side funding – e.g., schools ICT 9. Include both ICT and the use of ICT to achieve wider inclusion objectives. 10. Tax/fiscal incentives to network components & build-out Digital Financial Services: The Case of Pakistan Access: • Convenient access points to connect Long term: those who are excluded Universal • Digital Transactional Accounts, with financial access scale and viability through digitization of payments, transactions • Increase percentage of adults living within 5 kilometers of an access point by 2020 Vision: 2020. 50% of adults • Widespread acceptance networks and with transaction interoperability account Use, Range of Services: • Diverse Product Ecosystem Currently: • Increased SME lending as % of total lending 16% of adults with bank • Capacity and incentives to offer diverse accounts which range of tailored financial services with were 12% in adequate oversight 2008 survey • Consumer awareness and literacy to be (33% increase). able to select and use appropriate financial services 1 6 Regulatory Environment Two Regulators- Central bank and Telecom Regulator Working Together Separate Regulations by Both regulators – Jointly prepared SBP’s Branchless Banking Regulations, 2008 (updated 2011) PTA’s Regulations for Technical Implementation of Mobile Banking, 2016 SBP’s Regulations for Mobile Banking Interoperability, 2016 Third Party Service Providers (TPSPs) and financial institutions that offer m-banking services • Provides detailed mechanism for technical implementation of one-to-one and any-to-any model of m-banking • Existing models (one to one) will continue with their arrangements without the requirement of separate license A joint PTA and SBP committee to resolve the disputes between the parties, and to protect consumers’ interest. Operators and TPSPs shall put in place an effective and comprehensive consumer protection mechanism against risks of fraud, loss of privacy, delays in service provisioning etc. to the consumers. Quarterly Review of market dynamics, regulations and SOPs Telenor CM Pak Mobilink Ufone Warid Tameer Askari Bank Mobilink U- Microfinance Bank microfinance Microfinance Bank Alfalah Bank Bank Time pey (On Jazz cash Easy Paisa U-Paisa Mobile Paisa time) (Dec 2012) (Jul 2013) (Oct 2009) (Nov 2012) (Dec 2013) Total mobile banking accounts (m-wallets) -approx. 16 million (35% of the 45 million commercial bank accounts) 375 million annual m-banking transactions Annual amount transacted through m-banking - US$ 19 billion 300,000 m-banking agents all over Pakistan, which are more than 25 times the total number of bank branches (12,000) in Pakistan. 350,000 16.0 300,000 14.0 12.0 250,000 10.0 200,000 8.0 150,000 6.0 100,000 4.0 50,000 2.0 0 0.0 Number of m-wallet accounts (in million) (RHS) No. of agents Amount transacted Deposits in m-banking No. of m-banking through m-banking Year accounts transactions accounts (As of end Dec) (during Jan to Dec) Rs. in million Growth (%) In million Growth (%) Rs. in million Growth (%) 2011 550 59.0 209,120 2012 1,055 92% 120.9 105% 492,282 135% 2013 2,639 150% 191.9 59% 802,496 63% 2014 6,668 153% 278.4 45% 1,352,517 69% 2015 8,827 32% 375.0 35% 1,872,451 38% Source: State Bank of Pakistan Low usage of m-wallet accounts ◦ Active to total m-wallet accounts ratio is only 40% Mobile Money users are unable to use their electronic money in their daily lives in the same way they use cash – to buy their essential daily items Expensive mobile money transactions (mostly through OTC) Lack of merchant acceptance High taxes (16% sales tax and 15% WHT on the earnings of agents). Govt. has also imposed additional WHT on the transaction amount of non-filer. ◦ Low Interoperability in payments Thank you .