GOP set to sell unsold block of 4G spectrum, likely again on base price


When PML-N was in opposition, Ms. Anusha Rehman has being very vocally criticizing PPP Govt. including in every parliamentary Committees meetings for simultaneously offering 3G and 4G Spectrum in year 2011 and 2012. However, when she was put in-charge of MOIT, she forgot her own and her party point of view about simultaneous offering of 3G and 4G Spectrum and the loss it can cause to national exchequer.

It is now an established fact that 4G auction was a complete failure as neither Mobile operators nor consumers was ready for this advance services. In fact the entire echo system of 4G technology role out was not in place when Govt. offered 4G spectrum. Pakistan could have earned USD 1 Billion alone from 4G auctions instead of selling these scarce resources on based price if this auction was conducted 3 years later when both operators and consumers had tasted the benefits of 3G fast speed internet and their enthusiasm for even higher speed was developed. However we have not learned from our mistakes and once again we are setting platform to sell the unsold block once again on base price.

3G/4G auction back drop story is also now unfolding. We now have an idea how these Multinational operators influenced PTA and MOIT policies and decision making. The entire process was executed as per the script provided by most influential mobile operators in Pakistan. A Scandinavian and a local Cellular Operator was successfully able to pursue the senior officers in PTA to lobby the split of one 10 MHz spectrum into two 5 MHz spectrum in order to end the auction competition pressure. These two operators are now the sole beneficiary of this spectrum split. Last year, the Chairman of this group is also been investigated for similar offence in Uzbekistan for illegal payment of USD 55 Million from the year 2007 until 2011 which Swedish prosecutors suspect as to be “bribe” to Uzbek Authorities. Similarly, in 2013, a political personality very closely related to MOIT joined the board of directors of local mobile operator when planning for this split was been deliberated by MOIT and PTA.

Senior officers of PTA being known as the expert of the field was then able to push this agenda of mobile operator and convince MOIT for a split of spectrum which eventually resulted in end of competition among mobile operators for award of 3G/4G license. Sensing the situation, Reuters published a detail report predicting the possible level of proceeds from 3G/4G auction two weeks before the auction date. When the report was published, PTA was very disturbed and Chairman of PTA publicly announced that authority has decided to take legal action against foreign news agency Reuters for trying to “sabotage” the much-awaited auction of next-generation spectrum licences. However, as usual, nothing happened in this regards and time has proven that Chairman PTA’s announcement was just another eye wash for the public and we all know that people of Pakistan have very short lived memory.

This was achieved very naively between the lines of the two policy directive GOP issued on 3G/4G Auction. First Third Generation Auction Policy Directive dated 19th Dec 2011 signed by Dr. Ismail Shah as Member Telecom, MOIT clearly binding PTA for “Auction of 3 blocks of 10 MHz. each total 30 MHz.” and Second Next Generation Auction Policy Directive dated 7th Oct 2013 in which PTA was given the mandate to determine the block size for auction (removing minimum 10 MHz. block size term) and also the option to offer advance generations i.e. 4G.

Even before the issuance of 2nd policy directive, A UAE base mobile operator made it clear to MOIT and PTA that due to financial constraints they won’t be participating in 3G/4G auctions. Main reason for them not participating in auctions was that they were already having LTE/4G spectrum from their 2G auction of year 2003-4 and they wanted to capitalize on it without incurring further cost. This now has become a reality and this operator is now offering LTE services using their old spectrum. PTA was unable to foresee this possibility and when the launch of LTE services was announced on the old spectrum, PTA was not able to block them.

After exit of this operator, only 4 mobile operators left to participate in 3G Auction. It was very evident after the exit of one operator that now if GOP/PTA removes minimum 10 MHz. each block size term from 3G auction, it will practically kill the spirit of auction as well as the competition among the operators. However, this leverage was created in 2nd Policy Directive in order to accommodate Scandinavian Cellular Operator and PTA after GOP approval offered two 10 MHz. blocks and two 5 Mhz. blocks for 3G Auction. Four Operators, four Blocks, good bye to competition.

It also didn’t end here. In order to further release pressure of competition in 3G auction, GOP/PTA also offered 4G spectrum so they can divert the attention of one Chinese aggressive operator among the 4 operators on 4G auction who was having financial muscles to even opt for 15 Mhz spectrum, the so called reason for 5 Mhz. split. After this diversion, there was nobody serious who was interested in more than 10 MHz. block of 3G auction.

Things went as per script. Perhaps, all this was not a coincidence. This was systemic corruption by abusing the power and position which has resulted into loss of approx USD 1.5 Billion for Pakistan which now demand a very transparent inquiry against the culprits and to make an example out of them.

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