Pakistan’s telecommunication industry has recorded an unprecedented growth in the past two years despite facing strict regulations and unfavourable economic conditions.
Since the launch of third generation (3G) and 4G services in July 2014, the number of consumers looking to utilise high-speed mobile internet has crossed 23 million. In the meantime, the cellular subscriber base has reached 125 million. Seeing these figures, people will believe that telecom companies (telcos) are doing a handsome business in the country.
However, this is definitely not the case. A major trouble for the industry is pricing, which has been brought down by fierce competition amongst the five telcos and has likely reached the edge of sustainability.
Prior to the launch of high-speed mobile broadband, it was expected that data charges would push a lot of consumers out of the market as the telcos had spent over $2 billion on the 3G and 4G spectrum licences and the rollout of next generation network.
But surprisingly, they chose to keep data charges at the bare minimum, in a move, which initially sparked a digital revolution supported by affordable smartphones, that caused a 12% growth in broadband penetration in 2015, up from a mere 2.07% in 2014. This number is forecast to reach 44% by 2020, which according to the World Bank estimate will add 4.1% to the country’s economic output.
Although it is not uncommon for operators around the world to set data prices below sustainability levels for certain services, this is mostly balanced out by charging higher rates for other services.
In Pakistan, however, the operators cannot follow that path since other major services – voice and messaging – already have OTT (Over-The-Top) alternatives and the consumer does not have the same buying power as in other nations.
Source: http://tribune.com.pk/story/1065091/low-data-pricing-stunts-telecom-growth/