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 Competition in Catchup Frenzy

The recent launch of Wateen’s Wimax in Pakistan has put its wireless competition in a catchup frenzy. Reports coming from a number of vendors indicate extensive, short notice meetings that are taking place between providers and vendors and very mature decisions levels. Vendors, who had been chasing the providers for their Wimax platforms but faced an undecided response for quite some time now, are finding the new found sense-of-urgency pleasantly surprising. For them, Wateen’s advances on the Wimax front that attracted both local and international applause appears to have shook the sleeping providers from their deep slumber and procrastination.

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.

Worldcall Wireless in Karachi

Worldcall has banners up in various parts of the city announcing the availability of their wireless local loop service which was anticipated since May 2007. The advertisements say free local call, free nationwide calls (presumably on their own network), 85 paisa per minute to US/UK and 10 paisa/min for WLL based Internet. The service is running off Huawei’s equipment.

CDMA based WLL services have already seen earlier players like Telecard and PTCL and have drawn a mixed response in terms of service standard quality. The ‘free on-net’ calling phenomenon which was triggered by Telecard (and is now being followed by Worldcall too) has found some loyal subscribers. I regularly spot shop owners in various localities of the city keeping a ‘Go CDMA’ phone as part of their communication arsenal and most of the time, the end user is doing the ‘least cost routing’ - finding the service that provides the cheapest service to reach the particular end number.

However, with a very high/healthy tele-density that is regularly being cited in anything good is to be said about Pakistan and a stiff competition and friction between DSL providers, it looks like that Worldcall as a late entrant in this digital communication race in Karachi would be having a tough time at best.

Performance of the reported availability of EvDO services on this network would be worth observing. If you have a review of the service, please post it in the comments.

 

VSAT Hubs Mushroom

Pak Datacom is announcing that they are installing an iDirect VSAT hub.

Insufficient fiber and other wired infrastructure, limited range of existing terrestrial wireless technologies and a boom in ICT industry in Pakistan is causing an upsurge in the satellite services.

Banks and other financial institutions are one of the major drivers for remote area data connectivity market. New initiatives by the Government to introduce electronic management in its working is the often considered as the second largest factor driving the satellite services consumption in Pakistan.

Modern VSAT hubs are intelligent entities that make better use of the expensive and scarce satellite bandwidth resources by intelligently distributing the same to a large number of customers that are equipped with smart satellite terminals - costs of which is coming down as third-party CPEs made to a number of standards are getting cheaper. Installation cost and complexity for the remote sites is also coming down allowing better confidence towards the service by the end customer.

Lately, a number of network service providers have installed VSAT Hubs to service the growing data services sector. Supernet (iDirect), Comstar, Pak Datacom (wing of PTCL) and Multinet all have either installed or are in the process of installing VSAT hubs to complement their existing wired and wireless services.

The explosive growth of cellular services in Pakistan has resulted in the companies’ new quest to reach the untapped rural markets and in the absence of optical fiber backhaul, VSAT backhaul have picked up big times. Mobilink, Ufone and Telenor all have placed huge orders of VSAT backhuals for their base stations in far flung areas such as FATA and Azad Jammu Kashmir. The volume of the business has taken the otherwise go-slow network service providers by surprise and in certain cases, single orders placed by the cellular giants have been comparable with the annual volume of business done by the network service provider.

The Last Train

Most of the articles that appear about Pakistan’s Telecommunications market are sketchy in nature and leave a lot to be desired in terms of details and perspective. Comnews recent article aptly titled ‘ The Last Train‘ is an exception to this generalization. The 5,000 words article nicely covers all aspects of Pakistan’s Telecoms from Cellular to WLL to Wimax.

In the ‘Manna for Investors’ section, the report describes the current appetite for more fundings by the existing operators:

 For investors there are some opportunities to enter the Pakistan telecom market. Apart from buying shares of DIALLOG Company, which is looking for financing sources for expansion throughout the country, other companies like Worldcall and Instaphone also are looking for partnerships.

“Worldcall needs about USD 16 million just for implementation of its WiMax project. And for implementation of all its development plans, including WLL network expansion, HFC and Metro Fiber network construction, we need around USD 50 million,” says Sardar Ali Wattoo.

“We are capable of borrowing this amount, but if Worldcall is of interest to some well-known partner, then the majority shareholders of the company, Lahore businessman Salman Tassir and Sheikh Suleiman Hokani from Oman, are ready to share its shares in the charter capital.”

Instaphone is looking for partners for construction of its digital mobile network. “We are in the process of searching for an investor, as the first phase requires USD 300 million in investment capital. However, we are not taking a passive stance, and already have prepared 700 fields for installation of new base stations,” says head of the company Javaid Firoz.

The Pakistan telecom market is on the radar screen of major industry players. A source in Warid Telecom said that its shareholders, led by Sheikh Mubarak Al Nahaiyan, are in the process of negotiations with Vodafone for selling their share in Warid.

The gradual process of change in ownership of Pakistan telecom assets began last year, and no one is ready to evaluate the effectiveness of these investments.

Recommended reading for outsiders who want to get a good summary of local market as of 2007.

Omantel: Me too!

Omantel is reportedly also interested in buying stakes in a yet unnamed telecoms company in Pakistan.

‘The company is currently studying plans to enter into competition to purchase a share in a Pakistani telecom company,’ Omantel said in a statement. ‘The deal … would give Omantel an opportunity to expand its investments’. Gulf Arab telecom operators have been hunting for foreign assets as competition increases at home, and Asia has been a priority.

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.

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.

Worldcall Trials RedMax

Worldcall is currently doing trials with Redline Communications‘ RedMax platform for its Wimax (802.16d) services in Karachi Sukkar. As the company nears its launch of CDMA voice services in Karachi with 83 cell cites and a launch date (of CDMA voice services) of 6th May 2007, the same real-estate and infrastructure would be put to use for its Wimax services for which the 3.5 GHz frequency is already in the kitty.

Speechless!

Who said a blogger cannot be short on words. I am.

Wateen Telecom has a news on its website.

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 Communications‘ RedMax 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.

GSM Investments & 3G Licenses

Telegoegraphy is reporting on Warid’s further investment in Pakistan in the form of a $100m loan from IFC:

…..private sector investment arm of the World Bank, the International Finance Corporation (IFC), is to extend a USD100 million loan and arrange a syndicated loan of USD140 million for Paktel rival Warid Telecom. According to an IFC document seen by Dow Jones Newswires, Warid Telecom is seeking the loans to finance the construction, expansion and operation of a nationwide GSM network. The project, which began in June 2006, is estimated to cost USD 1.4 billion and is expected to be completed in June 2009.

Government of Pakistan is also reportedly considering to offer three nationwide UMTS (3G) licenses.

Worldcall Nears Homerun

Worldcall, one of the three nationwide CDMA operator (besides PTCL and Telecard), is launching its CDMA based voice services in Hyderabad, Sindh in the next couple of days.

Earlier, Worldcall services, that started from central Pakistan had reached till Sukkar. The Hyderabad network leg is based on hardware from Huawei Technologies. Hyderabad launch will help the company brace itself for a subsequent Karachi launch which is considered a very mature market with already high cellular, fixed and WLL penetration.

What’s In a Name?

This blog had a posting disconnect between Nov 2006 and April 2007 owing to the wordpress.com blog ban in Pakistan.  The last story before the disconnect was about Paktel which, at that time, threatened to stop its operations because of the losses it was making. In January, China Mobile bought Paktel from Millicomm International who was desperately seeking an exit from Pakistan in-line with their international corporate strategy.

China Mobile has announced (on Saturday) that they are investing $400 million and a brand name change for Paktel.

According to China Knowledge, China Mobile  is to invest US$400 million to extend its network in Pakistan, said company CEO Wang Jianzhou at the Boao Forum on Hainan Island on Saturday.

Wang said the company will step up improving sales channels and building new brands in Pakistan next year, adding that a wireless data transmission system will be built in the Pakistan.

And Flair, the showbiz-looking-telecommunication magazine (Issue April 2007, Page 84) says the brand name change is from Paktel to CM-Pak.  How good or bad is this choice (if the Flair report is correct) is subjective.

The China Mobile has sought the Pakistan Telecommunication Authority (PTA) consent to swap the Paktel mobile company name as CM-Pak, the name under which the company intends to operate.  The China Mobile that took over Paktel from Millicom International after paying dues has now formally requested the regulator for change of Paktel’s name.  Officials from PTA has confirmed that it was approached by the China Mobile with the application that it wanted to operate under the name of CM-Pak, but added no decision has been taken so far.

China Mobile has pumped in $700 million in the Pakistan telecommunication sector since taking over the management control of Paktel.  The company will invest $2 billion in the next three years (till 2009) to expand its network, an official of the Paktel told.

In other Paktel related news, the head office of the company in Islamabad is now inundated with Chinese nationals that have been brought in by the company to take more direct control of the things.

Paktel is also reported to have been talking to Multinet for access to dark fiber pairs on its Project Ittehad similar to the deal between Multinet and Telenor announced in December 2006.

‘Habibi Bakistan’

Loosely translated, this means, ‘My Love, Pakistan’. Of course, this is not an patriotic statement coming from a Pakistani. You need to read this hint in the greater background of Pakistan’s exploding telecommunication market and the Arab petro-money sink towards the promising landscape.

May be the third ‘W‘ is around the corner. I don’t know for sure. But I am also not  clueless.

Telenor to Wannbe Road Warriors: ‘Spare us your Rs 17K’

Telenor’s new postpaid brand ‘Persona’ is now focusing on its EDGE data capabilities. In a newly launched campaign, the European cellular operator is offering Telenor/Sony Erricson co-branded PC based card and service. The campaign shows an empowered women road warrior that is apparently doing some botanical research and modeling in one go right in the hearts of in the troubled tribal areas of Pakistan. And true to match her Rs 7 million Range Rover, the PC card is priced at Rs 17,000 plus actual data services charges that would probably go by the bytes. The service is limited by EDGE’s technological upper limits for data transfer rates but is apparently available everywhere on the Telenor’s foot print in Pakistan as well as outside Pakistan.

Telenor and other EDGE services in Pakistan compete with the CDMA 1X based data services from Telecard and Worldcall. Telecard used to offer GoCDMA Internet service which was recently given an exclusive brand called ‘iGo‘. One time charges are less than Rs 10,000 and data rates max at 153 kbps with average responses being around 60 to 80 kbps. The product lacks proper branding and support services can sometime be frustrating but is technologically advanced than the EDGE. Coverage, while available in most of the cities of Pakistan, has some coverage holes.

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.