Islamabad, Dec 26: The National Economic Research Associates Inc (NERA), a leading U.S.-based consultancy, has backed telecom operators’ requests for extended payment terms, reasonable reserve prices, and the shift to rupee-based pricing for Pakistan’s upcoming 5G spectrum auction.
During a presentation at the National Broadband Network Forum 2024, NERA’s Managing Director emphasized that Pakistan’s mobile sector is one of the most spectrum-starved globally, a situation exacerbated by delays in spectrum auctions, high base prices, and unfavorable commercial terms.
According to NERA, Pakistan ranks at the bottom of South Asia in spectrum allocation, as highlighted by the GSMA Mobile Connectivity Index 2023. The consultancy noted that high spectrum prices could limit competition, potentially stalling innovation and pushing up consumer prices. It stressed that lower spectrum prices could lead to higher long-term government revenues by fostering a more vibrant telecom sector, rather than the immediate financial gains from inflated auction prices.
Key factors contributing to the sector’s challenges include auction delays, the high base prices set for spectrum, and the dollar-pegged pricing structure. The devaluation of the Pakistani rupee has raised operational costs for telecom operators since the last auction in 2021, making it increasingly difficult to operate profitably.
NERA also highlighted the need for critical infrastructure reforms, particularly the expansion of fiber optic backhaul networks. Currently, about 85% of Pakistan’s 55,000 mobile towers use microwave backhaul, which is less reliable and slower than fiber optics. The consultancy emphasized that enabling fiber optic networks would ensure greater capacity and reliability, essential for the successful deployment of 4G and 5G services.
Further, NERA recommended facilitating smartphone adoption and ensuring that 4G/5G-capable devices are accessible to a larger portion of the population. Currently, only 1% of mobile devices on telecom networks are 5G-capable, a figure that needs to rise for 5G deployment to be viable.
In conclusion, NERA’s recommendations for the 2025 spectrum auction include setting reasonable reserve prices, extending payment terms to ease the financial burden on telecom operators, and releasing additional mid-band spectrum to support both 4G and 5G services. By addressing these issues, NERA believes Pakistan can enhance its telecom sector, boost competition, and foster innovation, ultimately benefiting consumers and contributing to long-term economic growth.
