30 million broadband connections by 2018 if 3G is auctioned in 2014

Islamabad ( MEDIA )

It is a widely recognised reality that broadband infrastructure contributes towards economic growth of a country and significant amount of job creation. Pakistan without 3G services was left with aging copper media to cope with broadband needs of the country while WiMAX operators could not fill the gap while EvDO technology can be termed as smooth enough to entirely replace the fixed broadband technology.

This whole proposition resulted into mere around 3 million broadband connections in last one decade against 129 million cellular subscriptions during the same duration. According to Pakistan Telecommunication Authority (PTA) data, the number of Broadband Internet users in Pakistan increased from less than 27,000 in 2005-06 to around 2.72 million subscribers and 30 percent growth during 2012-13.

The penetration level remains low at 1.52 percent. However, the remarkable growth of wireless technologies is an encouraging sign for the sector as major player Pakistan Telecommunication Company Limited (PTCL) invested a lot and it is currently leading the broadband market by a long margin with its EvDO services. With upcoming 3G spectrum auction a large population will be able to transition towards broadband services through high-speed wireless data networks. This is a trend that is followed in various markets as well.

According to different reports, 3G broadband penetration has exceeded fixed line broadband in almost every market. A recent report by Plum Consulting anticipates that Pakistan is set to achieve at least 10 percent broadband penetration (or 20 million broadband connection) by 2018 if 3G is auction in 2014. These estimates are based on low-demand forecast while with high demand forecast, broadband penetration in Pakistan can go up to as high as 16 percent or 30 million broadband connections by 2018 if 3G is auctioned in 2014.

With regard to positive impact on GDP, economic studies have proven the fact that there is a positive relationship between broadband penetration and GDP growth. This is true for both developed and developing markets. Different researches have established that impact of a ten percentage point increase in broadband penetration on GDP growth rates range from 0.1-1.5 percentage points, with higher impacts found in lower income countries like Pakistan.

If we carry a conservative estimate of 0.5 percent impact on GDP and assume that impact will last for 3 years then Pakistan’s current GDP will increase by Rs. 40 billion in one year after 3G auction, while another Rs. 105 billion increment after second year of 3G auction and Rs. 210 billion during the third year of 3G auction. The estimates suggest next generation networks are expected to add Rs. 380 billion to Rs. 1,180 billion to national GDP during next few years till 2020. Not to mention, these figures exclude the auction money that Pakistan is going to generate through 3G.

Regarding increased employment, same report and experts opinion indicate that over 900,000 new jobs will be created if 3G is auctioned right away. These jobs will span around various sectors including telecom, services, advertising, outsourcing and others. The increased taxes arise as a result of the general stimulus to economic activity i.e. they derive from taxes paid by all sectors of the economy, especially the data services.

The estimates also suggest that government would be able to generate addition taxes of at least Rs. 29 billion and at most Rs. 71 billion from various sectors after 3G auction. If we talk about socio-economic benefits, Broadband is an enabler which will enhance the provision of education, health and government services in Pakistan by reducing delivery costs and improving service availability.

A senior official at PTA said with access to broadband will entirely change the way we do our business, financial and private transactions, adding that the way “We interact with each other or the way we find our addresses, everything will be reshaped.” Moreover, smartphones with increased computing abilities are going to lessen the efforts and hardships we come across in our daily routines. “From the way we pay our bills to the way we register our complaints with utility companies will all go digital,” the official added.

The official said in addition, low cost and flexible access to IT resources, such as file storage, software and databases, can be accessed using cloud based services. Assume a system with centralized database and reporting of corruption or registration of complaints from general public will make the lives easier, simpler, efficient and more productive. Access to broadband technology and the internet would provide specific benefits to women enabling access to education and health resources and ways of generating income within their homes.

Many of the benefits from using broadband to deliver health and education services are not reflected in GDP estimates mentioned above as they occur over a long timescale (e.g. the benefits of better primary and secondary education can take 10 or more years to be realised in labour force productivity).—APP

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