US-based consultancy National Economic Research Associates Inc (NERA), hired for Pakistan’s upcoming spectrum auction, has recommended critical reforms, including rupee-based pricing, extended payment terms, and lower reserve prices for successful deployment of 5G networks.
These reforms, already in practice in markets like Vietnam, Indonesia, and Bangladesh, are critical to ensuring the auction’s success and demonstrating that Pakistan is ready for digital business.
The US consultancy warned that high spectrum prices could reduce the number of operators, weaken competition, increase consumer costs, and stifle innovation. Lower spectrum prices, however, would likely result in long-term higher government revenues by fostering a robust telecom sector, NERA’s managing director stated during the National Broadband Network Forum 2024.
NERA highlighted that Pakistan’s mobile telecom sector is among the most spectrum-starved globally. Telecom operators in the country operate 55,000 towers, with only 15% connected via fiber optic backhaul, which is critical for 4G and 5G networks.
Smartphone adoption also remains a challenge, with only 1% of phones on networks being 5G-capable, although this percentage is higher in urban areas. High smartphone prices, driven by inflation and import taxes, hinder adoption.
NERA emphasized the need for incentivizing investment in fiber optic infrastructure and easing deployment processes. It underscored the need to accelerate smartphone penetration to maximize the economic benefits of digital connectivity, such as access to financial and government services.
According to the GSMA Mobile Connectivity Index 2023, Pakistan ranks the lowest in South Asia in spectrum allocation. Factors contributing to this include auction delays, high base prices, dollar-pegged costs, and limited demand due to low investment incentives.
In November 2023, Pakistan approved a Telecom Infrastructure Sharing Framework, allowing operators to share infrastructure. NERA recommended promoting this sharing to enhance long-term sector profitability and affordability.
For the 2025 spectrum auction, NERA proposed several measures, including releasing 190 MHz at the 2600 MHz band, currently tied up in litigation, to meet market demand for mid-band spectrum.
It also called for resolving market structure uncertainties, such as decisions regarding the proposed telecom operator merger.
