Broadband Penetration – MoITT, USF @ Work

Universal Service Fund (USF) is the company formed to make use of the USF money that PTA has been generating out of the booming telecoms market of Pakistan. So far, USF has worked towards using its funds for the spread of voice services in the under-served markets of Pakistan. Of late, Ministry of Information Technology & Telecommunication has intended to guide USF to do the same towards increasing broadband penetration too.

USF, after some initial work, has concluded that there are no particular areas that could be defined as ‘under-served’ in terms of Pakistan and rather the entire Pakistan is under-served. USF has now asked MoITT to pass a ‘determination’ towards the same fact allowing USF to utilize the funds anywhere and everywhere in Pakistan.

MoITT has published a 39 page study document on the web which seeks to establish this fact (that the entire Pakistan is under-served in broadband services). A consultation session was held in Islamabad yesterday to discuss this matter with the industry. The proceedings and details of the session are still to come out but here are my initial takes on the document and its contents:

The  major conclusion points of the documents are:

  • Pakistan’s broadband penetration is very low
  • Currently there are around 100K Broadband subscribers which need to be taken to 1.6 million by 2010 (1% of population)
  • This low penetration is earning bad scores for us under the WSIS measuring criteria & there is a strong need to improve the same
  • Three approaches have been suggested for the GoP’s intervention in this ‘dismal’ state of broadband affairs:
    • No intervention – leave it to market; slow broadband growth expected
    • Bundle with Basic Services – only rural areas will benefit; existing broadband provides will loose
    • Tackle issue with a new format – dedicated efforts are expected to yield better results; divided in various phases

The document assumes or maintains that fixed broadband is a dwindling trend and wireless broadband will finally prevail (page 23). While this is true for the last mile domain, the infrastructure is ALWAYS wired (read fiber). The guys at the MoITT need to be pointed to this omission in consideration. Pakistan need to have a good wired infrastructure before we can decide which of the two last miles options (wired or wireless) is good for us.

The study also repeatedly mentions the similarity between low tele-density and low broadband penetration. However, the applications/demand side difference between the two (voice and data) is repeatedly ignored. While it is true that the gap between 2.7% tele-density (from where our telecoms boom started off) and current 50% tele-density was one of the reasons for the boom, it was the application (voice) that was ready to exploit this gap. In the case of broadband, a similar gap exists and this gap is what the study is considering as an opportunity. However, as obvious, the difference between our last success (in cellular voice) and current challenge is that of application – do we have compelling applications that will drive the growth that can ride this gap?

The document also does not considers demand creation at all. While supply end enhancements (by way of USF subsidies towards network deployments etc) are more than welcome, a significant portion of the efforts must go towards demand creation activities. Mandatory use of electronic facilities in the business circles, tax cuts for ISPs interconnecting with each other, financial benefits to private TV channels to host streaming servers inside Pakistan, creation of public/open Internet Exchanges etc are all example of such efforts.

Wateen’s Wireless Service

Shakeel Ahmed, friend and a regular contributor at TGP, has the following clip and quick information to share about Wateen’s wireless service in Lahore. The video clip shows a sneak peek by way of the synchronization process of the Motorolla CPE.

CPE was installed in DHA Lahore and has one ethernet + voice port on it. Download speed is around 120-130KBps with next hop latency around 15-20ms.

You can find some previous discussion on the wireless service by Wateen at TGP archives.

Mobilink embraces data

The long on-going, almost over-due project was declared signed and closed with Alcatel-Lucent. Daily time has the full story here. This is going to be the second major countrywide Wimax project, the earlier one being deployed by Wateen and uses Motorola’s gear. The project, whose financial size or commercial availability dates has not yet been publicly disclosed, reportedly makes extensive use of the strong channel sales partners that Mobilink has developed in the rewarding cellular market of Pakistan over the past many years.

The next similarly sized announcement should come from PTCL which is still talking to a number of solution vendors in this domain. Apart from these three large scale projects, a number of other entities, some of which are in the security infrastructure of the country, are deploying Wimax technology for their respective requirements.

There are till a number of players like Telecard and Cybernet who won the 3.5 Ghz frequency in the open auctions during deregulation but are not moving ahead with their Wimax adventures for want of some business case precedence and internal priorities.

Qtel to Invest $80m in Pakistan

Arabian Business is reporting that Qtel will invest $80 million in the next few years via Burraq Telecom that it acquired (75% stakes) in April for $12.3 million. The fundings is expected to bring wimax based Internet to the major cities of Pakistan.

Sans Wateen, MTC-Warid Deal Nears Closure

The MTC-Warid deal we discussed earlier, is reported to ‘near closure’. A high ranking ex-employee of Warid with close insiders contacts confirmed the rumors floating in the market since the morning. The interesting twist is the fact that the would-be owners are only interested in Warid and have shown no interest in Wateen, the data and telecommunication infrastructure wing of the Abu Dhabi group.

Wateen is deploying Wimax services in major cities of Pakistan on a Motorola platform, has laid thousands of kilometers of optical fiber across Pakistan and is building a large number of carrier hotels to serve, besides Warid, other telecommunication entities in Pakistan that have traditionally suffered from the monopoly of PTCL for these services.

Find The Candy

The long tipped off Mobilink-DVCOM deal is finally making it to the press. The News is reporting that deal with transaction value estimated at $12 million.

DVCOM obtained an Long Distance International (LDI) and WLL license in 2004. Under the LDI license, the company was operating a popular brand of calling card services called Big Time. The brand was the first one to start the price war on Pakistan-US calling destination @ Rs 5 per minute. The market rates (on fixed, WLL and cellular networks) have now dropped down under Rs 1 per minute, thanks to the fierce competition, popularity of the destination and tons of cheap terminating operators in the US.

DVCOM never really put the WLL license to any physical use despite acquiring 1900 Mhz licenses in 9 out of 14 telecom regions of Pakistan.  And so was the case with the 3.5 GHz allocation where the company acquired licenses in 10 out of 14 telecom regions.

So what could be the candy in DVCOM for Mobilink given the fact that Mobilink now has a full-blown PCO business wing? Real Estate? Human Resource? Customers?  None of these exist in the case of DVCOM. The only appeal seems to be the 3.5 GHz allocation that DVCOM has under its belt.

And perhaps this could explain the Wimax homework participations of the 23 million heavy cellular company in Dubai and (up coming) Singapore.

Ovum: Pakistan Leading Wimax Emerging Market

This global Wimax update in the Americas Network mentions Ovum Consulting naming Pakistan as the leading emerging market for Wimax.

Qtel & Burraq Deal

This half cooked news in The News (that probably evaded editorial quality review) was a mystery as the headline and the contents did not make any obvious co-relation.

However, a better done story later emerged here on The News (thanks to Mustafa @ BBPak).

Qtel is said to be buying Burraq Telecom for $30 million. Burraq Telecom was among several companies, which acquired LDI (long distance and international) and WLL (wireless local loop) licenses in 2004.

Apart from the regular LDI voice business, Burraq has been actively pursuing a Wimax strategy with Redline CommunicationsRedMax platform. A lot of new names that acquired the WLL license from PTA in 2004 never intended to go for basic telephony services as has been the case with Telecard, VPTCL and Worldcall’s CDMA based voice services. The strategy had been to acquire licensed frequency band in the 3.5 GHz range and offer data and Internet services in an under-served data market.

Certainly Not Journalism!

Daily Times is back with a rejoinder (registration required to read Daily Times [smarties can use bugmenot {firefox ext here} to bypass such absurd restrictions on news portals) on Wateen and its CEO. The battle that we discussed earlier here and here is getting uglier and uglier. While its fun reading such stuff in a lunch-less Ramadan day, it is technology journalism that is getting hurt. That press and media always have influential groups behind them who ’tilt’ the stuff the way that suits their ends is a known fact. However, there is a big difference between being suggestive and crude pin-pointing.

Only if there could have been a sprinkle of journalistic balance in this article, it would have made a far more interesting industry account of contemporary Pakistani Telecom market.

Daily Times on Wateen

Pakistan’s Daily Times agains come up with a FUD aimed right at Wateen. As I mentioned in one of my previous posts on this topic, news-analysis is one thing, direct personal on-slaught is another. From the article published today, September 19, 2006 (read full text here – registration required to read Daily Times [smarties can use bugmenot {firefox ext here} to bypass such absurd restrictions on news portals])

From the article:

Experts say that the management of Wateen is ominously reminiscent of the collapsed BCCI. “Huge salaries, perks and freewheeling executives are the common link,” claimed an insecure insider. Chief Executive Officer Tariq Malik claims to be a UK qualified Chartered Accountant but an examination of the list of members of the institute does not carry his name. The industry has been told that he is “a director on the main board of British Telecom” but this is not true because he was only an analyst on a Malaysian Telecom transaction by BT. Further enquiries reveal that he left the UK in a hurry without much explanation, giving rise to rumours that he might have been involved in some improper financial dealings. His last employer in Pakistan has alleged that when he left “he stole highly valued technical information including a request for a proposal issued by Warid Telecom in which the entire inside of the proposal inadvertently still carried our name!”

This is getting too direct even for news commentary I would say.

PTA Keeps on Lipservicing Broadband Cause

PTA has yet again paid lipservice to the cause of wide broadband penetration in Pakistan. At a seminar organized on the theme of Wimax by South Asia Middle East North Africa (SAMENA) Telecommunications Council, PTA’s chief repeated the combo of words that could easily be created by anyone associated with the industry.

More clear, practical announcements on the broadband penetration cause would have been far more useful. Yes, PTA has published a consultation paper that aims to bring down the costs of Internet bandwidth in Pakistan but bandwidth tariffs are just one part of the broadband proliferation. Matters relating to IP traffic exchange between service providers, local loop unbundling, application agnostic Internet infrastructure, development of localized contents, IPv6 adoption via incentives and legislation, subsidies on local telehouses in the private sector and many other factors are needed to kick-off a broadband revolution in Pakistan in its true sense.

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