Few sectors have undergone such rapid, lifestyle-changing transformation in the past 25 years as telecommunications. Luckily, Pakistan has been a part of, and benefited enormously from, the telecommunications revolution that has shaped the industry since the late nineties. In the noughties, Pakistan’s telecom industry saw massive growth as mobile telephony expanded, emerging as one of the fastest-growing markets not only across Asia but elsewhere in the world.

Since then, growth has continued unhindered, with the number of mobile subscribers rising to 190 million (nearly half are unique subscribers) – and mobile broadband subscribers to 127 million by September this year. Fixed telephone and broadband subscribers have grown to three million, according to the industry regulator, Pakistan Telecommunication Authority (PTA). Pakistan’s overall tele-density, which signifies the number of users per 100 people within an area for any telecom network, has also increased to 80.52% (79.44% mobile tele-density and 1.08% fixed tele-density). Broadband penetration has gone up to 54.48%, including 53.14% mobile broadband penetration, but remains lower than in many other peer markets.

In the last two-and-a-half decades, the telecom revolution has driven a massive shift from fixed-line connectivity to mobile connectivity, radically transforming the telecom landscape. According to Aamir Ahsan Khan, President of Ericsson Pakistan, mobile phones have become a part of our person, allowing us to connect with friends and family here and abroad, watch movies on global streaming services, send or receive money, shop online, and, last but not least, use social media to interact with others, promote businesses, entertain and educate ourselves, and consume news and information.

Rapid growth notwithstanding, all is not well. A Mordor Intelligence report on Pakistan’s telecom market says the country’s telecom industry “is still less developed than that of most other Asian nations.” The reality is that the telecom industry is contending with multiple existential issues ranging from the rising cost of doing business and borrowing, to poor quality service resulting from insufficient spectrum (the mobile industry is one of the most spectrum deprived in the world as the government has made only one-third of the spectrum available to operators), shrinking average revenue per unit (ARPU) in a highly competitive market (the State Bank of Pakistan says ARPU for the mobile cellular operators has dropped to $0.80 per month from more than nine dollars per month in 2003/2004), heavy taxation, weak exchange rate, import curbs, and the like. Yet the Mordor report expects the market size to grow from $4.38 billion in 2023 to $5.14 billion by 2028 at a cumulative annual growth rate (CARG) of 3.28%. Furthermore, a report titled Inclusive Index of 2022, commissioned by Meta and executed by Economist Impact, pointed out that Pakistan ranked last out of 22 countries in Asia overall, and 79 globally across the key indicators of availability, affordability, relevance and readiness. Yet, despite this, Pakistan’s telecom sector has come a long way from what it used to be in the 1990s.

The way we connect today was unimaginable 25 years ago when telecommunication was a state monopoly, providing little other than voice services via fixed telephone lines. Getting a phone connection used to be a nightmare and it took months, often years, and a big sifarish, before getting one. Call rates, particularly for overseas calls, were unaffordable. Mobile communication was still in its infancy – although Instaphone and Paktel had already launched their mobile services – and data transmission via the internet was emerging. Social media had not arrived on the scene.

The transformation of the telecom industry did not happen automatically. It was the outcome of a conscious decision made by the government to liberalise the country’s telecom market in the last years of the nineties by creating competition and establishing a modern regulatory mechanism while shifting the investment to the private sector. At the heart of what paved the way for the telecommunication and digital revolution was the enactment of the Telecommunication (Reorganization) Act 1996, which laid the foundation for the telecom revolution.

Under this initiative, the state monopoly of the Pakistan Telecommunication Company was privatised as Pakistan Telecommunication Corporation Limited (PTCL), listed on the stock exchange. The following year, the country’s first telecom regulator, PTA, came into being. The subsequent ground-breaking changes introduced in the Telecommunication (Reorganization) Act opened the telecom market to private operators for fixed-line connections and introduced much-needed competition in the cellular mobile sector, which had seen the entry of Instaphone and Paktel in 1990 followed by Mobilink in 1998 and Ufone in 2001.

Mobile telephony grew phenomenally from 0.3 million subscribers to 190 million in 2023 after the authorities introduced the “Calling Party Pays (CPP)” regime in 2000, under which no charges are paid by the call-receiving party on mobile phone calls. Telenor was the next telco to enter the market in 2005 and was followed by Warid the same year. Warid was acquired by Mobilink in 2015 to create the biggest telco, Jazz. Around the same time, the government sold 26% of its shareholding in the state-owned PTCL to Abu Dhabi-based Etisalat, transferring the company’s management and assets to it. In 2008, China Mobile bought out Paktel to launch Zong as a wholly-owned subsidiary, with the second largest market share of close to 25% of Instaphone, Pakistan’s first mobile cellular operator that declared bankruptcy in 2009, a year after PTA cancelled its license for failing to pay the license renewal fee.

The second watershed moment came in 2014 when the government decided to auction the 3G and 4G spectrum – albeit belatedly. The benefits reaped from the additional services and functionalities enabled by 3G and 4G upgrades created unprecedented opportunities for economic growth by improving connectivity, enhancing financial and social inclusion, and expanding productivity in every sector of the economy including but not limited to agriculture, healthcare, education, and finance. The Covid-19 pandemic showed that there has never been a greater dependency on digital technology. During the pandemic, mobile technology helped economic activity to continue during lockdown, enabling new ways to deliver education to children and healthcare. At the same time, the pandemic highlighted the growing digital divide across gender, social and economic classes and rural-urban divide. The technology that is supposed to bridge these divides has actually amplified them in many areas. Jazz CEO, Aamir Ibrahim emphasised this in his article published by Express Tribune last year: “…Covid-19 has increased our dependency on the internet exponentially. The internet and smartphones are no longer a luxury and providing the internet to the masses is no longer an opportunity, but an emergency. So much across the rungs of our economic ladder depends on digital connectivity that if we do not act immediately and decisively, Pakistan will be left further behind in the race towards global relevance.”

A 2020 report by the international GSM Association (GSMA) pointed out that “the importance of the mobile sector for Pakistan is significant and growing. It is a vital contributor to the economy and is redefining the way individuals, businesses and state bodies function and interact. With decelerating GDP growth compounded by a rising population, the jobs, taxes and productivity gains generated by the digital ecosystem will be pivotal to supporting the health of Pakistan’s economy and society moving forward… As neighbouring markets accelerate digitisation programs, keeping pace requires that Pakistan does more to successfully exploit its demographic advantages, including mobilising its vast – and increasingly tech-savvy – youth population.”

The report also quoted the then Chief Digital Officer for Pakistan, Tania Aidrus as saying that Pakistan has to simplify access and digital connectivity, and reduce the coverage gap. “More than half of mobile connections do not have active mobile broadband connections. The reasons likely range from cost to socio-economic factors; we need to tackle those systematically. While we are approaching 90 million unique subscribers, some basic hurdles need to be removed for the remaining Pakistanis.”

Clearly, Pakistan’s telecom industry is one of the most promising, with a large potential for growth. However, it cannot capitalise on its promise unless policymakers resolve the critical issues facing the industry.

Nasir Jamal is Bureau Chief, Dawn Lahore. nasirjamal6592@gmail.com