3G Auction: Another InstaPhone in the Making?

drowning-hands-(1)With recent developments regarding the auction of 3G – industry is abuzz with discussions about the modalities and outcome of possible 3G auction later this year.

Though we are not yet aware of the type and kind of 3G auction that government is planning, but from preliminary reports it is likely that a open-bid auction that must start from a pre-determined price is likely to happen three 3G licenses.

If reports are to be believed that three 3G licenses will be given away then this will leave at least two cellular companies without 3G in coming years. (We are assuming that no outside operator will buy 3G license)

Or put in other words: a market will emerge with three 3G operators and two GSM operators. This scenario (with little variation) is something Pakistan is familiar with, i.e. four GSM operators and two AMPS networks namely InstaPhone and Paktel.

What happened to InstaPhone and Paktel isn’t a mystery for anyone. But for the records – both the operators resulted into huge loss, layoffs, monetary deprivation for vendors, license fee loss for government, business closures for franchises and distributors and what not.

It is time for Pakistan to learn from past experiences and failures. Instead of pushing two operators away from new technology – just to make bidding successful (in government’s viewpoint by raising more money) will be a suicide attempt for national economy.

Early reports regarding 3G auction suggests that each licensee will be awarded with 10MHz spectrum from 2100 MHz spectrum – which translate into 30 Mhz of total frequency that government of Pakistan has allocated for 3G licenses, while the rest is likely to be used by agencies or military, as claimed by sources.

Instead, government should auction five licenses of say 10MHz each totaling 50 MHz or they can auction 20 blocks of say 3/2.5 MHz each (like they did in Germany). This will lessen the overall cost of license to incentivize the operators to move ahead.

3G auction experiences in Italy, Netherlands, Switzerland suggest that weaker operators drift away from auction vey early, leaving little competition for the remaining to bid. If this fact is coupled with current economic downturn and local market ARPU – one can forget about high bids by limiting the license.

Instead, if government really wants to capitalize the situation then five licenses at a pre-determined price would be the best deal to offer.

In addition to above theory, absence of MVNO is deal breaker for any operator without 3G license. Meaning that there won’t be any option left for 3G-less operators but to wrap their businesses and to go back home to crash the market.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK


  • It’s hard to say what might actually happen if such a scenario arises.

    While 3G is for the higher-end audience, GSM operators can still survive by providing competitive and low rates as most of the user-base in Pakistan has non-3G enabled phones.

    The whole concept of having 5 operators in a country with only 100+ million cellular subscribers still doesn’t make much sense to me. India has near 900 million subscribers and they are still managing with 5-6 operators easily :)

    • admin

      How about those countries with less than 25 million customers and four operators?

      • Anwer Baloch, Quetta, Balochistan.

        Countries ruled by sane, sincere and patriotic decision makers donot face such problems which we are facing. 3g, 3g, 3g, 3g… we are listening this word for long but thanks to our policy/ decision makers we may be listening this without result for another long time. After all, their personal Swiss Bank accounts are more important for them than the National Interest.

    • Yes, Saad. But I think this was the same situation when GSM came about.

      Initially, 3G will be ‘high end’. But as is the case, the high end will eventually trickle down and become the standard. In telecom (as in most tech industries), this ‘trickling’ happens at break neck speed (and I am sure you know that).

      So maybe, the author is right in pointing out that the non-3G operators will ‘eventually’ lose out. (this ‘eventuality’ can possibly play out in 5 years even!).

      But, this doesn’t mean that there shouldn’t be any 3G license of course. What we need – as PRoPakistani also would agree with I think – is a stronger regulation of the minimum call rates. The telecos are now operating on low margins hence do not have Cash in Hand to invest in 3G fully.

      But this is a long topic, and of significant interest to me. So I’ll stop and go back to working :D

      • monis

        the 2 non 3g operators will be licensed a 4g operation :D

  • arshad

    which two cellular companies will be without 3G

    • Unman

      Warid and ufone – you think them Arab babooos want to put more money into this country. They only come here to hunt, they thought they could make some money in 2004 but all they have is losses !

    • usama khalid

      Definitely the two will be Warid and Zong!!! becharay…..

  • Stone

    Number of operators will hardly matter unless we have a drastic population wipe out :) but all this hoo haa about 3G has just gotten old!! No one bothers to mention the justified unwillingness of operators to buy the license. They may have given favorable comments but internally, none of them are ready to jump the ship(which is quite expensive) to 3G…….

  • K. Hussain

    If Government is planning to offer three 3G license to the operators,then in my opinion out of
    five operators in the country, only three operators, that hold 3G licence could continue their service and remaining two will possibly merge with the three 3G licence holder, otherwise it will very hard for them to capture market share resulting loss in revenue resulting the result as the author mentioned for the case of instaphone and Paktel.
    I agree with the author that Goverment should allocate license to all five operators resulting a fiar competition among operators and would result better services and low cost for the customers using 3G services.

  • Sleepless

    W.a.r.i.d won’t be bidding for the 3G license for sure. The Sheikh needs to cough up some money fast.

    • no.mercy

      Warid has the most stable and the fastest network in pakistan..i hope they get the 3G license too..Warid FTW and yeah i dont want telenor and mobilink to get the 3G license..they are greedy networks with super sucky service

      • Shahid Saleem

        Ha ha! Well I guess you are entitled to your opinion, no matter how far from reality.

        Zong, Mobilink, and Telenor are ready for 3G. Telenor was ready a long time ago, Mobilink was the laggard.

        • no.mercy

          we will see!

  • zain

    i totally agree. 3g technology with the loss of two operators will not be good at all for our economy and for our country
    we should try our best to retain these 5 companies

  • zain

    i worked in telecom sector for years . i can guess which 3 operators will stay in
    if i write an article about it will it be published??

    • admin

      sure – please send it to us through this page: https://propakistani.pk/guest-writing/

    • usama khalid

      I’m sure Zong and Warid will slip away. :) Remaining three will be the license holder…..

  • Khurram

    U never know Warid
    and shaikhs are awakened these days….may be this merger thing can occur and warid gets merged with mobilink and and then all is well for warid.
    Telenor has already tried for the merger with warid….but the best telecom resources utilized and used by the company in Pakistan is Warid.

    • waqas

      Warid will bid for sure as ORANGE may invest in because warid PK is $ 2 billion company and will shake market again

      • Shahid Saleem

        Shake the market AGAIN? Meaning warid is a has-been already?

  • no.mercy

    I think the following will get the 3G license and the others will merge or just leave the mobile space in Pakistan (which seems improbable)…

    1) Zong is backed by world`s largest telecom network China mobile..so it has some hard cold cash to get the 3G license and btw Zong`s eagerness in this spectrum can be seen by their cheap internet packages..

    2) Warid is backed by the UAE shieks and it is already the best network in Pakistan in terms of quality if not in terms of cheap packages..i personally do hope they get the 3G license

    3) Ufone..it is a PTCL subsidiary and my Mamoo who used to work in PTCL at a high post told me Ufone will get the 3G license..

    So the future is dark for telenor and mobilink..

    • Saad Durrani

      If Ufone gets a license only because it is from PTCl then it will cause legal problems.

      Warid, my friend, is a company with a bleak future. Zong, on the other hand, may get one.

      It is a joke to say Telenor will lose out. Telenor, like Zong, is one of the largest mobile companies in the world. They might bid for it.

    • Shahid Saleem

      — So the future is dark for telenor and mobilink..

      In the Real World: Telenor, Mobilink and Zong are ready. Warid and Ufone are nowhere.

      • usama khalid

        Mr. Shahid, how can Warid be in line for getting 3G license? They are not earning good from Pakistan. Their customer base is so far static. I think, if three license would be issued, the companies who would get it will be Mobilink, Telenor and Ufone probably… For Zong their still has to go long way ahead…

      • ZIFAH REHMAN

        YES ZONG , TELENOR, AND MOBILINK ARE READY, BECAUSE THEY ARE SWAPPING THEIR BTS, WITH 3 G ABLE , WARID , AND U FONE ARE REALLY BEHIND IN THIS CASE

  • monis

    there is no problem about 3g mobile phones and no of data users, cuz these companies can provide high speed internet like its being done all over the world.
    like in india reliencei started providing 3mb, 10mn and 27mb internte connection through usb :D

    and if the government is sincere i believe we can wait for a year and directly have a 4g connection instead of first getting a 3g thing which the rest of world is leaving and then after don’t know how many years we will move to 4g :P
    so in my opinion its better to wait for a year or so and then directly jump to 4g with all 5 operator having 4g no auctioning .

    • no.mercy

      it is also a feasible solution as 4G can do 3G too..so it is a win win situation only if PTA and the government gets serious about it

      • Shahid Saleem

        Yes, PTA should clarify: is it giving license for 3G or is it giving license for FREQUENCY? Because if it is Frequency, then companies can use it for 3G OR 4G (OR 5G, etc)

  • rehman

    Zong should get 3G licence.because it already has very good internet speed in 2G connection.and very good packages

    • usama khalid

      Zong, according to my understanding, at this stage will not be able to get 3G license. He is a last entrant in the Pakistani telecom market and they have not even earned a lot. Their network quality is going down. Their voice quality is not up to the mark as well. On Eid, according to ProPakistani, they took back their LBC without any prior intimation. They have not been able to catch a huge customer base so far. They are popular as worst paymasters in Pakistan. Chinese companies do invest but invest very kanjoosly… So I think whenever the license will be awarded, Zong will slip away!!!

      • ZIFAH REHMAN

        I AM REALLY WONDER, ABOUT ZONG MANAGEMENT, AS THEIR EQUIPMENT IS MADE BY ZTE (BTS) WHICH IC NOT IN GOOD QUALITY, AS IN NORTH THEY ARE USING ERICSSON, AND IN SOUTH THEY ARE USING ALCATEL, AS COMPARE TO POPULATION IN PUNJAB THEIR EQUIPMENT IS VERY CHEAP, IT CAN NOT WORK IN TOUGH ENVIROMENT BUT THEY STILL USING IT, THEY CANT EARN AUR GET CUSTOMERS IN THIS CONDITION UNTILL THEY SAP THEIR BTS WITH HUAWI, SIEMENS, ERICSSON,

  • Kashif

    The service at this time is really worse for all networks, the thing needed is to lure the investment in the country to let the economy be stronger that is falling down straight but is there any responsible person whom we can see at this time?

  • Hope some thing like this happens soon, as dont know why the industry of Pk is still stuck in to technologies of 2G.

  • Shariq

    well, it is highly unlikely that the rest of the 2 telecom operators will wrap up businesses because of not being able to provide 3G services given the volume of expected 3G users in Pakistan over the next couple of years. The case for GSM vs. AMPS was different as it related to the basic voice call service and the influx of GSM phones in Pakistan.

    Having said this, i believe, its extremely unfair to intentionally leave 2 players behind just to ensure an exorbitant amount of license revenue from those who have already trusted Pakistan with huge investments and are staying back with us despite our unique law and order situation in Pakistan ! unfair. totally unfair.

  • Furqan Punjani

    Dear admin i would slightly disagree here. Issuing licence to all telcos me ignite a fresh cartel that was there few years ago when mobilink and ufone were only present in GSM. Cartel comes in when there is huge cost involved and companies prefers to get their cost back as soon as possible.

    The plan to issue licence to 3 telcos would continue the competition in the industry where these 3 will have an edge over data plans while having striving competition among themselves while other 2 will compete on call rates and GPRS.

    Not to forget that we have only 5% users of data plans rest of the revenues comes from voice dialing.

    Thanks

    • Shahid Saleem

      — Not to forget that we have only 5% users of data plans rest of the revenues comes from voice dialing.

      Honestly I am sick of that statistic. Can you tell me how many people use Voice on mobile phone compared to internet? Only about 5% of all population uses internet, compared to at least 40% use mobile for voice. So based on that do you think anyone should invest in broadband services?

  • haseeb

    Hmm i don’t think so it could hurt the other 2 telecoms which wont have or wont bid for 3g..
    Because uninor which is operating in india doesn’t have 3g as much as i know but still it is working there and introducing new plans for 2g(gprs) connection.They might bid later but they are not leaving the competition as they have not 3g.

    • no.mercy

      uninor is actually telenor but they have changed their name there..whatever the case is you can see even in a 3G environment in india telenor still is having a 2G network in india than what can we expect from them in pakistan :/

  • haseeb

    I know but iam saying that if they can survive there so why can’t the other two here.
    But ya iam also telenor user and iam finding it NO from telenor to 3G. :S

  • Great news, i hope they can get their name back, As the service of Insta in the past for second to none….

  • Unman

    We all want telenor to get a license so they can take some of that good Europe money into our economy.

  • Tariq J Qureshi

    Interesting comments and speculations! 3G- 3rd Generation is about technology like HSPDA etc etc. Unless you have it, you don’t know what it can do. Its all about data mobility. Imagine how mobile voice expanded the market from 2005 till today by 20 folds. It is expected that 20 Million users will use 3G, the very fast mobile internet access from the cell phones.

    The price will be based on data download as it is in rest of the world, so besides casual surfing, we expect business applications will be the key utilization, that will range from mobile banking solutions like access to bank accounts, money transfers and e-wallet. In healthcare expect that your medical tests can be communicated to you on internet, and medical devices with 3G interfaces provide immediate info to your doctor, for security applications expect vehicle and people tracking to become a paid service, for education markets think you can access appear for your tests on mobile devices, get your home assignments and examination on mobile devices (ipads and smart phones).

    We hope the next elections will be mobile voting (balloting) so we can vote from cell phone, ipads, computers and voting machines from anywhere without standing in line. The uses are limitless and people in Pakistan are as dynamic as anywhere else!

  • Tariq J Qureshi (TQ)

    Mobile devices are the the key drivers of success for 4G and now 4G around the world. Iphone (OS), Android and Windows operating systems on mobile devices have changed the way we work and communicate.

    Yes the devices are getting cheaper day by day, infact the average reduction in price is 50% a year. Imagine Chinese cell phones are already 60-80% lower in price, and what you need is what works and not brand-names. That is what will drive 3G and 4G technologies. Imagine receiving every bill on your mobile device instead of paper-bills and then paying them right off the mobile device. You technically save 4 hours per bill that the nation can use for other productivity.

    Next imagine shopping for groceries from you mobile device without leaving from your home with goods delivered in 2-3 hours. This is what technology is all about improving our life. With 3G (limited) and with 4G you can attend a conference remotely and deliver class lectures remotely, or have vocational training right off your mobile device (ipad, smart-phone and even computer). M2M communication is another application already working on 3G and 4G networks, that includes meter reading, toll collection, tax collection systems, advertising, location based services-like ordering food, to rickshaw to booking your travel ticket and paying for it. Fast mobile internet access is not just about surfing, but actually about making manual tasks automated. The biggest change that we want and can be delivered through mobile internet access is in e-Government.

    Remember your mobile device is also linked to NADRA and in hence your ID card, drivers license and credit card of the future. Device prices go down when volume goes up, and the whole world collectively drives the volume, so its not about Pakistan. I am sure many of you in telecom world know who I am. Remember in days when I talked of mobile internet in 2006….well today dongles are connected to your computers and laptops, so besides Wateen, Wi-tribe and PTCL EVDO you have other choices. Oh the market has expanded by 20X from 2006 to today in fixed (DSL and Wireless Internet Access).

    So now my forecast is that with mobile Interact access, cheaper devices and the applications eco-system in place Pakistan will have 20 Million users using mobile 3G applications for one thing or another. Internet is not just about downloading music and films, there are thousands of other uses, like getting your lectures, examinations and ‘How-to” do things right off your mobile device. Imagine getting immediate good and bad news reported from a mobile device…or talking to your doctor off a mobile device, or attending a lecture (video streaming) remotely……life will be so different.

  • Rauf Azam

    How about giving out 5 licenses but with a time lag and with a strongly enforced minimum price??

    For instance in the beginning two (or may be even one) license is offered for auction. This will create an intense competition and will fetch high bids … after a period (pre-decided lag period) of may be six months another license is offered for auction and so on. The final license would be offered to the fifth (left behind) company at the reserve price. Of course no one would like to be left behind because that would mean a greatly disadvantaged position but at the same time there won’t be any forced extinction kind of thing either.

    Just a suggestion to ponder upon …

    • no.mercy

      +1

  • Sarfraz

    License should either be free and the Govt should continue such heavy taxation already on telecomm

    or

    The license to operate should be auctioned and the tax be removed or brought down to 15% as compared to 31.5%.

    GoP means GOVERNMENT OF PIRATES :P aaarrhhhh

    • no.mercy

      License should be free??..you kidding me

  • Sarfraz

    License should either be free and there be regular taxation or the license be auctioned and the taxes be brought down to zero or 15% as compared to current 31.5%.

    GoP means Govt. of Pirates. :P

    Feel and think free, down with oppression!

  • Amjad

    Guys my choice of 3G operators are:

    1) Telenor
    2) Mobilink
    3) Ufone

    Warid and Zong are not in the 3G list for instance. Warid is already running on debts and almost bankrupted while Zong has no network capabilities to run a 3G network.

  • ZIFAH REHMAN

    INSTAPHONE LICENSE IS GOING TO RESALE AGIAN,, ITS MEAN THAT ANOTHER NEW OPERATOR IS COMING IN PAKISTAN MARKET, HMMMZ REALLY GOOD AS BEING TELECOM ENGINEER IT WILL GOOD FOR ME AND FOR OTHER ENGINEERS,

  • Rafi

    I think, the matter is not of 3G, the matter is maturity of GSM market. we know except of some cumtomers who are well awre about the current technology, they want to avail new technology and progress in it in their daily routine of life. the literacy rate of pak is very low, at leasts more than 60% customers of each GSM operator belongs to middle or below than this people. they are not aware about the new technologies. 3G is required huge investment in Telecom sector. i think Mobilink telenor and Ufone have good customers they may not take risk. only warid or Instaphone can come back and survive and fight back in telecom sector. but still the market is not mature in GSM technology so the question mark shall be on the success and growth of 3G Licensee.