Auction of New Cellular Licenses In Pakistan

Hello Jamshed Nice work. This is Arnold Balbido. Email me at abbalbido@hotmail.com Have a few questions about Telenor`s recent GSM license in Pakistan. Rgds.

It reminds me of 1999, when Nortel of Canada was preferred over Motorolla, who wanted to introduce IDEN in Pakistan. They say there was lot of pressure from the Canadian Goverment. What a shot in the foot that it was rejected!

The same contracters later moved to Maryland USA and Azherbhaijan. Ironically, the deal was mostly indigenous in that it was backed by strong overseas Pakistanis.

Does someone know of Karim and Company?

Best Regards

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Well as far as ur gsm and amps irrelevance to consumer is concerned .... I msut tell you that ufone and insta lost many connection and customer due to jazz free sms. Insta hafta upgrade theri system to keep in pace with time. When people will be so on addicted with mms and gprs etc then I wud ask does network operator make difference ??

Secondly the bidding price was published in business section of the dawn news paper and you can check it. If you dont find than lemme know ....... I wud do the library work for you.

Thirdly I am aware of the fact what echloen in europe and NSA in Us doing. I am totally aware fo this fact that there is a major saab appointed at mobilink to tap calls. Infact they gifted them a system to tell location of the caller/receiver when they needed to hound on MQM in Karachi. What I want is that they should have no right to tap my calls......my call means I have constitutional rights of privacy and this freedom is in every law. There is requirement of some court orders I guess in US and EU. Excpet for some extreme security measure like of Kofi Annan can be exculded for permission from court....rest other people to be traced must rout thru out corrupt courts.

Lastly, Tell me will there is lowering of tariif ???

good article, one of my cousins lives in Swat and can`t decide whether to get Paktel or Insta connection. I am leaning towards Paktel because it`s going GSM

A few points,

1) There were rumours before Ufone was launched that the other Mobile phone companies were paying high ups to delay the launch of Ufone till their customer base was stronger?

2) Pakistan`s regulatory authorities as a whole are inept, whether it is PTA or PEMRA, they are under resourced under staffed, not accountable, favour government organisations, and have no system of oversight from civilian authorities. This comes tto the greater issue of consumer rights in Pakistan.

3)Fair competition is always good, as the writer may notice Pakistan is riddled with Public and private sector monopolies, the end result is the country has lost out heavily iwhen it could have adopted some of the latest technologies earlier on.

4) Credit where credit it due it`s the present privatisaon commission chief Abdul Hafiz Sheikh who is pushing denationalistaion, I firmly believe if you give him 3 more years you`ll see a very different Pakistani business sector.

5) Lastly isn`t there a;ready a danger of a monopoly with 2 of the 4 companies owned by one group and Orascom considering bidding for PTCL?

The long term prospect for Pakistani economy is bleak at best, and down right scary -if the `gormint` does not change it`s stance. The signals coming out from Pakistan are not very helpful for long term investors and developers. Pakistan has $12 billion cash in pocket, GOOD! but whats the use if it cannot be put to use? Applying Ultra conservative laws of investment, one can borrow 5$ for every $1 in your pocket, and expect to thrive on 10% returns. What is Pakistan`s accomplishment in last 2 years in attracting foreign capital?
Pakistani economy heavily depends on agricultural and similar products where the profit margin is negligible considering the collateral investment in the terms of money, man power and time is extremely high. When the priorities of `gormint` (khaki and mufti) are factored in, which lack vision, commitment, and transparency; the favored business model is a scheme culminating in GRAB and RUN.
Another misconception Musharraf is peddling to the West is about his ``silent majority``, unfortunately no-one is buying his line. Anybody who does not believe that the majority of Pakistan is deaf, dumb, and paralyzed. must be living in the mountains with Bin Laden and Co. A 60% devaluation of assets over a decade, in a cutting edge business (telecommunication) speaks volumes about inability of Pakistan to cash in on ``trends``. It is depressing to witness the Ata-Turk, aka Musharraf, aka General, aka Mr. President, aka true boss of Jamali, aka true friend of MMA, aka Pardon-er (conditional!) has completely failed to grasp the situation in Pakistan, he has pushed the poor and oppressed to a new level of hopelessness. Who cares if we can make a call on a cell phone?

#5 ``It needs a REVOLUTION. What is point of giving phones to the MUTE & DEAF? ``

I second your comment...

Thanks to all readers who spent the time to read this rather long essay!

#5 Dear XeroxKhan!

I can understand your frustration!! I recently arrived in Pakistan have pulled my hair several times already!! In any case, I think eventually PTCL will hve to be broken in 5-9 regions and sold seperately. The end of PTCL`s monoply and government`s endevours to attract new firms in the FIXED line of business probably will not be much successful. What they should do is to drop price on cellular phones and allow Local Loop operators and Cable TV operators to roll out local loop services. However, PTA is still trying to play by the old rules from 1996.
When Pakistan initially planned PTCL privatization in 1991, the market was valueing it at around $12 billion. Now, in 2004, the same asset is valued around $3-4 billion. I hope Gen. Musharraf takes a stronger stance on the issue of PTCL`s privatization.


#4 - Dear fountainheader!

Yes - India possibly will become the second biggest cellular market after China in the next few years. The way Reliance initially got the Local Loop license and then managed to twist it into a full cellular license is an interesting political twist. In any case, I think the Indian telecoms regulator is moving at a fantastic pace....good for u!


#3 - Dear malik99:

1- customer satisfaction and quality of service is a major bench mark and performance criteria. Regarding many firms in the market, as u know for every firm to provide coverage, it needs to build infrastructure. To provide coverage to the same area - say Times Square - If there are twenty firms, then everyone has to put their infrastructure, and if there are two firms then the cost of infrastructure is less (for the industry). If there are coverage problems, then the network capacity can be increased. A dding more operators is a good solution, if there are NEW markets to cover - like rural areas. If you already have a city covered, then the need is to improve capacity in the existing infrastructure.

2- I agree with you that infrastructure sharing is very useful. Like in the Newyork market, T mobile is sharing its network with ATT. Also in the US, many rural operators provide roaming to the national carriers in remote areas to increase the foot print of the national carrier.

4- Politics is indeed important for CDMA - since Irwin Jacobs, the Head of Qualcomm, is very close to the former and current Presidents. However, I am just talking in terms of technicalities. You probably would know that the 3rd generation evolution of GSM networks, called UMTS is a CDMA system!! So, the whole world is already going to CDMA in any case. The reason is higher capacity and spectral efficiency etc. CDMA networks are successful in Japan, South Korea, Australia, US, South America, China and recently in Eastern Europe and India. The current world wireless user pie of 1 billion users is divided 30% CDMA and 70% to GSM / TDMA / AMPS etc.



#2 Dear malyck!
Thanks for reviewing the rather long essay and your comments.

Let me respond to your adds:
1 - You mentioned that the two firms will compete with only ufone and mobilink, since these r GSM. However, the fact is, the consumer does not care about technology, and the competition is to acquire subscribers. If I want to get a mobile phone service, I can go to the four existing or the two future firms, so the competition is in six players. In US, Nextel is IDEN, Verizon / Sprint are CDMA, ATTWS/ Cingular / Tmobile are GSM, but the user does not care. In effect, he is buying service from any of these firms.

2- Thanks for updating subscriber numbers. My information is based on PTA data collected from operators in December 2003.

3- Interesting information. I am not aware of any actual pricing of the bids... Please let us know of any news items related to this. Thanks!

4- Exactly! The problem is not the cellular firms or too little competition or technology, the real problem is excessive taxes, price floors and caps, and high interconnection tarriffs with PTCL.

5- Let me say this clearly - a ``lawful intercept`` - LI - is built into EVERY telecom switch. There is not a single western country that DOES NOT have LI capability. You cannot operate ANY kind of telecom service, without providing the government the full capability to TAP user calls. In one of my previous assignments, I am aware that my firm provided the FBI not only full LI capability for voice calls, the FBI requirements were to provide TAP ability to all DATA connections. The FBI wanted not only to know which web page the user was on, IF IT WAS ENTERING ANY DATA LIKE BANK ACCOUNT NUMBERS / PINS, FBI WANTED THAT... AND THEY GOT IT. Any engineer working with Cisco, Nortel etc who knows the LI requirements can affirm that the capability is BUILT IN. So, BEWARE, the Big Brother is always watchnig you!!!

7 - The conditions of third world countries are very similar, where ever you go. However, in all this social chaos, people do need infrastructure - roads, schools, hospitals, services like telecom. It is easy to blanket everybody a thief, but certainly there a many many people who are tring to fix and develop the societies.

In India we have both CDMA and GSM. It caused some regulatory hassles, but a unified license for all telecom services took care of it. The Convergence Bill will further address this issue.

Reliance, India`s fatest growing telecom company is CDMA. Tatas have also started CDMA operations. Tatas already own a stake in Idea, which is GSM.

Denationalization of Telecom market in Pakistan is a pipe dream. Just wait and see the proposed ``bids`` by the foreign multinationals. This is one more wayin which the `gormint` will be liquidating a public asset for which public will pay dearly. The higher-ups will make their ``cut`` in the deal and allow the Private company to make up for the losses by gouging the public. Pakistan does not need cell phones. It needs a REVOLUTION.
What is point of giving phones to the MUTE & DEAF?

GREAT analysis of Pakistan`s mobile industry landscape. However, I found a few areas where i beg to differ:

- author has concerns about ``too much competition``. However, this should not be the cause of concern. One area which this article does not explore is ``customer service``. Increased competition usually results in better customer service, not to mention competitive prices. There is still a large untapped pool of mobile customers in pakistan, and therefore the number of competing firms should not be an issue at this point. I can understand that author is pointing out his concern`s regarding competition from the service provider`s perspective. However, from a healthy and robust industry perspective, it is better for an infant industry to have large number of players. Let the forces of competition weed out the weakest. It would be tragic for this industry if it only starts with, for example, 2 entrants.

- ``infrastructure sharing`` among service providers might not be a bad idea. However i have two concerns in this regard. One, from a ``customer service`` and Service Level Agreement (SLA) perspective, would there be finger pointing among vendors in the event of a section of network breakdown? SLA`s among the service providers, and then between service providers and customers need to spell this out. As long as the Service Provider A takes full responsibility of its service, regarless of whether it traverses through Service Provider B or C`s network, this concern could be mitigated.

- Regarding whether a vendor starts with a state of the art network or a phased migration to state of the art network, i suppose vendors would have to do their market research in this case. I would be interested in seeing some metrics on how adaptive pakistani population is to a new technology. Would they be willing to pay extra for better quality network and hence advanced services? Or do they only care about the ``mobility`` element of the service?

- Now for the debate regarding GSM and CDMA. Let me say it categorically: It will be a huge mistake on Pakistan`s part to adopt CDMA. If PTC adopts this standard, it will be more for political reason rather than business reasons. This is an American (Qualcomm developed) standard. Americans have been trying endlessly to get this standard adopted by other countries. So far they have failed. Even the occupied Iraq refused to go with this standard. So did China. The whole world has adopted GSM. It makes no sense whatsoever to adopt this parallel technology which no one else in the world cares for. The world is moving towards a ``global mobility`` rather than mobility within a country. And that is the perspective we need to keep. For those interested in reading up on relentless american efforts to shove CDMA technology down Iraq`s throat, they should read up the following:

http://siliconvalley.internet.com/news/article.php/2171271

Few clarifications by a reader for other reader:

1. These two licenses holders will compete just with ufone and mobilink as the liscence is gsm not amps based.

2. By now mobilink has crossed 2 million barrier and so does the ufone done with 1 million barries as the growth rate is somewhere 3.8%

3. The delay in auction is due to the debate of 33 companies that are showing interest and government as govt says that the floor price shud be atleast $100 million per liscence but the companies want it to be somewhere near $25 million.

4. Whatever happens the consumer will never get benfit as the minimal rates are to be determined by PTA (Purely Terrorist Authority)

5. Another reason for delay is the scuffle between the intelligence agencies and the prospective companies as its a rule of thumb that our ISI & IB `s majors and clonels get to tap any phone & track people with out any court authority. So companies dotn want such ``unlawfull invasion of privacy``

6. One center of mobilink earns more than 10 million PKR in ``profit`` every 24 hours so its a way too good deal for cell companies as the market has mroe potential.

7. Lastly ..... the bribes has already distrubuted and according to my humble knowledge one company has already been `selected` and is know to be a well repute company of USA

Thus this proves all the surface talk of govt is crap .......... total crap ..... the inside thingiii is different ...... I am also planning to sell my driving liscence, tv liscence and NASC liscence ...... any bidders ????????????? ......................... lol

Why doesn`t Chowk Staff format my articles like that even when I had done all the grunt work. It makes me feel unappreciated and unwanted.