Cellphone operators reluctant to adopt 3G technology

[Naveed Yaseen]

By Hina Mahgul Rind
KARACHI: Third generation technology or what is popularly known as 3G provides typical services like wireless voice telephony and broadband wireless data, all in a mobile environment. With a capability for high-speed wireless data transfer, the 3G has enhanced and made possible a myriad of additional applications.

Mobile network operators and telecommunications service providers the world over are embracing recently adopted 3G wireless standards in a bid to cater to the demand of emerging users and to offer new services to their customers.

Cellular operators in Pakistan seem not in favour of acquiring 3G technology as they believe this is not the appropriate time for it. No GSM (global system for mobile) operator has so far adopted 3G technology in the country.

All the cellphone services providers are of the view that 3G technology is going to be expensive, both to the customer as well as the provider. Installation and network administration in itself will require heavy investments while licence cost and investment required for upgrading network infrastructure and business systems remain the biggest impediments in the way of operators opting for 3G at a time of global economic slowdown.

Another issue is that the new technology means existing handsets will not be compatible with it and new and more expensive handsets as well as packages for 3G will make a big hole in the customer’s pocket.

Mobilink spokesman Omar Manzur said “we support new technologies to bring Pakistan in line with technological advancements in the world. At the same time, there is concern over return on investment owing to relatively low 3G demand on account of current state of telecommunications and affordability of using broadband services as well as price of 3G handset and devices. The demand for 3G will evolve over time and it requires significant investment.”

He said Mobilink was always committed to offering new and innovative services to the consumers through cutting-edge technologies and would be part of the evolving 3G landscape at an appropriate time.

Omer added Pakistan Telecommunication Authority (PTA) and the IT ministry were key drivers behind the telecom revolution in the country and were very keen to introduce 3G services in the country.

However, “we believe the government will set the date for auction of 3G spectrum when economic conditions are favourable for the industry to roll out 3G services at a price affordable to common people.”

Telenor Pakistan spokesman and Manager Corporate Communications Affan Haider said only a favourable regulatory environment would make 3G viable in Pakistan. “There are certain factors which are to be considered. 3G handsets are still relatively high-priced for mass market and penetration in Pakistan is still in single digit (around 7 per cent only).”

He said consumers were already reducing spending on handsets in light of current taxes on services and import duty on handsets. Under such circumstances, usage of handset and premium services would stay low.

“Cellular operators are at a competitive disadvantage against wireless local loop (WLL) operators which are offering broadband services. The price to acquire 3G spectrum for cellular operators can be very high when compared with the throwaway prices that were paid by WLL operators for acquiring the spectrum.”

Moreover, the Government / PTA must keep all stakeholders in mind while devising the process for award of 3G licenses.

“We believe that 3G is only viable if the spectrum auction base price is kept rational and not too high. New entrants are not allowed as in that case the market will not remain viable for any operator.”

He said a significant percentage of the auction reserve price was marked as earnest money for participation in the auction and that would act as an entry barrier to non-serious players.

“Before the auction of 3G licence takes place, spectrum availability throughout the country should be ensured so that operators getting the licence can start technology roll-out in all parts.”

He added the licence process should be carried out at an appropriate time after due diligence and consultation.

Zong spokesman Amir Pasha said “we are definitely interested in adopting 3G when the time comes. No one can deny 3G is the next step for wireless communications, however, in Pakistan’s current situation this dream may not be a reality for some time and this is not because technology is not available or even the resources to deploy it.”

He added the mobile phone service companies faced several challenges with their current networks including heavy taxes, import duties, high foreign direct investment cost, low Average Revenue Per User (ARPU) and low teledensity in rural and remote areas, which made it difficult to embrace the technology any time soon.

“In this scenario, introduction of 3G will only enhance currently available features and industry gurus are not expecting any movement in growth rate in the next few years.

“Even with the GSM network, many of the features are still not available to the users and most people do not take advantage of those that are being offered to avoid or minimise additional cost in their bills.” Pasha added even if the licence was obtained as per government schedule, implementation could be put on hold until the customer truly explored all avenues of GSM and was ready for the next revolution.

http://www.thenews.com.pk/daily_detail.asp?id=208513