Guest Post by Parvez Iftikhar

AS A CONCERNED CITIZEN, I WOULD LIKE TO URGE ALL THOSE WHO HAVE ANYTHING TO DO WITH THE ICT SECTOR TO DO WHATEVER THEY CAN, TO PUSH AND EXPEDITE INTRODUCTION OF MOBILE BROADBAND (3G OR WHATEVER).  I say this because yet another delay (albeit short and for good reasons) has appeared.

Irrespective of the on-going, completely unnecessary, “controversy” surrounding auction of 3G in Pakistan, allotting 3G frequencies to telecom operators is extremely urgent and essential for Pakistan. We have already been left behind by others who used to be our followers in 2G. Mobile broadband – or 3G – should have been introduced here already four years ago. The delay has made us lose huge opportunities relating to job creation, international trade, economic growth and Foreign Direct Investment (Telecom FDI 2007: US$1,824 mil and 2011: US$ 79 mil). Not to mention letting the technology gap between the advanced countries and us widen even more, despite the fact that more than 70% of our population is below 35 – normally considered early adopters of modern technology.

According to ITU’s World Telecommunication/ICT Indicators Database, a total of 159 economies worldwide have launched 3G services commercially and the number of active mobile-broadband subscriptions has surpassed one billion.  Countries from New Zealand to USA are allocating huge amounts of national resources to deploy infrastructure, like Optic Fiber Cables, to facilitate delivery of broadband to the citizens. Whereas we are taking ages even to allocate the God-given resource of frequency-spectrum which will facilitate provision of broadband.

Some skeptics ask what we will do with 3G? Mostly they are only thinking in terms of mobile phones – and not mobile broadband. Although a lot could be done with 3G smart phones too (present estimate 15 mil smart phones in Pakistan, expected to increase to 50 mil by 2016), it is 3G mobile broadband, mainly using USB dongles, complementing fixed broadband, that is of bigger value and main attraction for countries like ours. While people in developed countries usually use mobile-broadband in addition to the fixed, mobile-broadband is often the only access method available to people in developing countries.

Broadband has tremendous commercial usages but one of it’s main benefits lies in it’s capability as a deliverer of basic services to hundreds of millions of citizens, especially those living in the hinterlands of the country. Education, Health, Governance, Commerce, Agriculture, Women Empowerment,… all can find their way. Greater access to broadband services has been found to help accelerate achievement of development targets like the internationally-agreed Millennium Development Goals. It is only using broadband that we can serve our exploding population (CAGR: 2.5%) at their doorsteps, not only to bring prosperity to them but also prevent mass migration to urban centers and save our bursting mega-cities from crumbling under their own weight.

Right now in Pakistan broadband is available in less than 300, small and big, towns and cities. All the present two million connections being of fixed broadband category (50% wireless). But then there is only so much fixed technologies can do. Fortunately, thanks to the ubiquitous 2G GSM network, 3G can take broadband to every nook and corner of the country, becoming accessible to more than 90% population, with relatively small effort. I have deliberately used the word “effort” and not investment because investment will come from private sector telecom operators. Here is a sector where the government doesn’t need to bother about development budget allocations and resource constraints. Just like 2G was such an effective engine of growth for our economy, 3G too could contribute significantly. Admittedly the private sector operators would like to invest and deploy 3G mainly in large cities, but for the rest there is USF!

As for the controversy, firstly, on a per-megahertz-per-year basis, the announced base price is equal to the peak price achieved last time around. Secondly it is likely to go higher during bidding, despite worse political/economic/security situation than in 2004. And thirdly the licenses are going to be technology-neutral, therefore it is the operators who would decide whether they deploy 3G or something else (incidentally 4G – the so-called LTE Advanced — is not even there yet). Yes, the only thing that all of us need to be vigilant about and jealously guard is the process being followed. The process must be fair and transparent. Period.

The author is the formar CEO of USF (Universal Service Fund) Pakistan. He joined the newly formed USF in May 2007 as it’s first employee. Within weeks he built the organisation and successfully started executing projects to bridge the digital divide in the country thru private sector telecom service providers. USF Pakistan is globally recognized as a success-story in it’s domain. Parvez receives frequent invitations to deliver talks at international forums on Universal Service Obligation issues (mainly sponsored by World Bank, ITU and USAID) as well as conduct workshops and provide consultancy services to various countries. Presently Parvez is working as an Independent Telecom Consultant. Before USF he was the country-head of Siemens Telecom in Pakistan. Has been to great learning institutions like Carnegie Mellon and Oxford Universities and has been extensively trained by Siemens in Germany.

This post first appeared on Parvez Iftikhar’s personal blog.

We have discussed on the achievements of Universal Service Fund (USF) in past, but underlying the working structure of USF is a lesson to learn. A lesson on building an institution. While many institutions have gone down the line during the present government tenure, USF have moved up the stairs. A recent Business Recorder Research Report discusses USF with a notable point that the organization was in infancy when the current political setup commenced.

There is no paucity of people in Pakistan, both knowledgeable and uninformed, who associate democratic regimes with managerial bankruptcy and institutional ruination.

If historical evidence wasn a reason enough, the current regimes dismal performance has cemented such judgments.

While various public sector institutions bled (or “weakened” in the Presidents opinion) in recent years, there are very few functioning public sector organisations left.

One such organisation which weathered political whirlwinds and managed to stay on course all these years is the “Universal Service Fund”.

More interesting is the fact that USF was in infancy when the political transition took place in 2008.

USF was established back in 2006 as per the Ministry of IT and Telecoms USF policy of 2005, and commenced its operations in 2007.

In line with World Bank recommendations, it was modelled on public-private-partnership.

The funds board of directors draws representations from government, IT and Telecom sectors and consumer groups.

The government acts as a trustee and monitors the fund performance.

The funds overarching goal was to bridge the digital divide in Pakistan through development of ICT infrastructure in those un-served and under-served areas which were commercially unviable for telecom operators.

To make the voice telephony and data services available and affordable in such areas was central to the funds objectives.

Telecom operators contribute 1.5 percent of their adjusted revenues to the fund, while part of proceeds from “Access Promotion Component” (APC) also land into USF account (maintained at MoIT).

Following the PPRA rules, USF-funded projects are advertised to licensed operators and are bid against.

USF subsidises projects in areas such as rural telephony, broadband and optical fiber cable networks.

For over four and a half years now, USF has contracted projects worth Rs.17.1 billion, in an open and transparent way.

Notwithstanding the slowdown in subsidy disbursals in 2010 and much of 2011, USF is regarded by the sector as a success story as it has achieved some major milestones (see the illustration).

The fact is that the USF experience offers some valuable insights into the process of institutional-building and public-private-partnership in a country like Pakistan.

Despite governments involvement and multimillion dollar contracts, not once has the fund or any of its officials been charged with malpractice.

The governance structure of the fund has largely kept political pressures at bay.

The organisations former CEO, Parvez Iftikhar, happened to be its very first employee.

He literally started this organisation from scratch, set up the office premises, and built a team of professionals to run the fund.

Parvez vacated his post just last month, leaving behind a vibrant and functioning institution which has a lot to cherish and even more to look forward to.

USF takes its funding from licensed telecom players, identifies projects within the sector, invites the same players for bidding, and then subsidises major portion of the project cost.

Though the government controls the fund, it cannot impose its decision arbitrarily.

The Planning Commission should seriously look at this model for under-developed sectors, rather than being all over the place and achieving very little.

For smooth functioning of the fund, its operational and financial autonomy must be protected.

In addition, both the telecom operators and relevant authorities must step up.

Currently, many mobile operators appear reluctant to participate in USF projects due to security issues and higher operating expenditures in remote areas.

The proposed subsidy on operating expenditures must offer some incentive to change that.

Moreover, USF board meetings must be convened regularly so that activity picks up.

Towards that end, government is the one in need to get its act together.

Here is hoping that with a new CEO in charge, USF may continue pursuing its mandate!

The report first appeared in Business Recorder.

Continuing from the Telecom Highlights of Q1 2011, in this post we shall look at the Quarter 2 (Apr-Jun 2011).

1. Ministry of interior raised concerns over use of multiple SIMs and false IMEI devices. The ten point recommendations are yet to be finalized.
2. Pakistan scores 3.5 and gets a global rank of 88 on Network Readiness Index. The ranking marked Pakistan in LM category, meaning lower-middle income class. Among LM economies, Pakistan ranks at number 16. We still lag a lot behind other economies like India (3) and Sri Lanka(8) in the same category.
3. The Universal Service Fund (USF) published a documentary on its success story. It is unfortunate that the CEO under which the USF became the pride of Pakistan has now been sent home.
4. On the global front, Microsoft in an strategic move acquired Skype.
5. An impressive initiative came from regulator authority, PTA. Telecom services coverage maps are published on the PTA website.
6. The biggest upset for prepaid cellular market comes in with putting up more charges on recharge/reloads. The cellular companies justified these under the head of maintenance/operation/admin charges.
7. Telenor Pakistan came up with a  response to allegations put on by a certain blog on the fundings being received by Pakistan’s first mobile banking service easypaisa.

This was all about the second quarter, we shall get back with more highlights of the year in our coming post.