Telcos Show Serious Concerns over 3G/4G IM

3G

Telecom operators have shown serious concerns relating to various matters after thoroughly going through the Information Memorandum for next-gen license auction that is planned for April 7th, 2014.

Apparently they aren’t happy with variety of things, ranging from the price to payment terms and from number of licenses offered to spectrum types that up for sale.

Ricardo Tavares, CEO of TechPolis and consultant for all five mobile phone operators in Pakistan on policy matters related to spectrum auctions, has penned down his reservations in a write-up that is shared with ProPakistani.

Ricardo – on behalf of telecom operators – mentions that a new license for 3G and 4G is unacceptable as operators already have an operating license under which they are offering 2G services.

He maintains that a new license will mean new framework that will be built on top an existing license to cause serious conflicts in terms of obligations and deliverables from operators’ viewpoint. He suggests that new spectrum can be auctioned with a “spectrum ordinance” – or whatever name PTA wants to give it — and general business rules may remain the same as defined in the earlier operating licenses.

He explains that all the obligations attached to new spectrum can be defined in spectrum ordinance. He said that there can’t be a new license for every new spectrum auction.

He further notes that rollout obligations for 3G and 4G networks are severe and may result into no participation in 4G spectrum auction.

Ricardo argues that operators will first rollout 3G network to build an environment for data services before offering ultra-high-speed 4G services and hence rollout obligations attached to next-gen licenses are not only unrealistic but may hinder the operators altogether to get into the spectrum auction.

Ricardo explicitly wrote that the taxes on telecom services are unjustified. He urged the government to reconsider them to make this sector more fruitful for the people and the government alike.

We are told that all these reservations are already communicated to Pakistan Telecommunication Authority, Ministry of IT and Ministry of Finance.

PTA has said that it will keenly listen to all the concerns and may address to few of them as well.

Consultation period – a time during which operators or any other stakeholders can suggest/recommend/propose changes in IM – will end on March 10th, 2014.

Below are the selected excerpts from Ricardo’s article, which we are producing to share operator’s view point:

Let’s start with technology neutrality. This means that telecom operators can use spectrum they acquire from the government in auctions to deploy any technology they find suitable for delivering services to consumers.

This has been a corollary of Pakistan’s telecom policy since the 2004 Mobile Policy that is still in effect. The current IM for the auctions and the draft license both break with this principle and restrict the use of new spectrum, “only for the Next Generation Mobile Services for which it is permitted.”

This would tie the hands of operators unnecessarily and break with a key principal of telecom policy: governments should not impose technology; the private sector chooses technology.

As in many big mistakes, the break from technology neutrality comes with good intentions. Pakistan waited too long to deploy third generation wireless networks—3G, or HSPA for the acronym of its mainstream voice and data technology.

4G or Long Term Evolution (LTE) came after that. The government’s intention is to accelerate roll out of new networks. But tying the hands of operators is not the best way to achieve this objective. Leaving operators free to efficiently deploy technologies based on each operator’s unique strategy is better and would keep a key principle of policy enshrined in the existing policies and best practices.

Another fundamental issue is the auction design itself. It is designed to create an artificial spectrum scarcity. The country has five operators but only three slots of spectrum in the 2.1 GHz band (a key slice of spectrum for 3G) is being offered. This could create fierce competition and hike up prices in this band, but it could also lead operators not to engage in the auctions. The government is also offering two slots of 1800 MHz (useful for both 2G and 4G) and one in 850 MHz (good for both 3G and 4G).

However, it does not allow all operators to bid for it—only winners of 2.1 GHz (1800) or a potential new entrant could bid (850). A better auction design would allow all operators, existing and new, to bid for all bands simultaneously. Whose new entrant would want to enter a cut-throat auction for 2.1 GHz? The current auction design is self-defeating in attracting a new entrant and can alienate the handful of existing operators; if the auction design is improved, the government will fetch better financial results with the auctions than under the current design.

To give operators flexibility to deploy 3G and 4G, spectrum associated with both should have flexible roll out obligations. Operators most likely will deploy 3G first to develop a mass data market for the common person that today does not exist in Pakistan. 3G devices are cheaper and more suitable to the mass market. Then, they will start deploying pockets of 4G and will expand.

The current obligations for roll out of 3G (2.1 GHz) and 4G (1800 MHz) are too ambitious and discourage bidders. More time (a factor of 2 times more for 2.1 GHz and a factor of 5 for 1800 MHz) would allow operators to bid for both spectrum bands confidently. The current obligations will cause no bidders for 1800 MHz, destroying value for the auctions.

There are additional financial burdens in the draft license that also act to discourage bidders. Future revenues resulting from services provided with this spectrum will be in Rupees but the cost of the spectrum is in US dollars. A mismatch between this big expense (spectrum in USD) and revenues (in Rupees) is not financially sound.

Pakistan needs to go beyond the practice of charging for spectrum in USD. Moreover, if bidders decide to parcel 50% of the payment in installments, libor plus 3% is due. In USD, the financial hedge is there, no interest should be added to it; in Rupees, interest would make sense due to inflation. A number of unnecessary guarantees for payment of regulatory fees also add to the costs of the auction and should be eliminated, as other punishments for non-payment of fees are already in place, including cancelation of license.

On license, there is maybe the biggest flaw in the proposed scheme for the auction. The proposed draft license is unacceptable to existing operators which already have an operating license. The new draft license contradicts the existing one in several aspects forcing operators in fact to create “two accounting operations”—one to serve the existing license and one to serve the new one. It is time to separate operating license from spectrum assignment in Pakistan in order to resolve this problem.

This is a big job for the PTA but it can and it should be done now while there are consultants in house supporting the auction. To start, issuing a simple spectrum assignment with terms of payment, duration, and obligations could address these concerns, while the PTA would move to a definitive separation between operating licenses and spectrum assignments in the next few months. Potential new entrants would get already operating license and spectrum assignment in separate.

Finally, an important element in the environment for the auctions is taxation. In defining how much they are willing to pay for spectrum, operators run an Excel spread-sheet with the potential returns over the period of the license (currently 15 years, better if 20 years).

Taxation is a major factor affecting returns. The Finance Ministry would go a long way to enhance the likelihood of auction success if it eliminates the activation tax of Rs. 250 and bring the GST to the 17% that is normal for most sectors (telecom currently is paying 19.5%). This should be done ahead of the auction to create certainty, instead of only promises that can be withdrawn once the auction is done.

Finance Minister Ishaq Dar, Minister of IT Anusha Rehman and PTA Chairman Dr. Ismail Shah form a dream team that any government would like to have running the affairs under their responsibilities. It is now in their hands to assure that spectrum auctions will be successful. Much work is still to be done, but it must be done for the sake of the common person in Pakistan.

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


  • Danish

    Expected Delay again?

    • arghhhhhhhhhhhhhhhh

      Please shutup i m sick of ur kich kich :<

      • Syed Zuhair Khalid

        I agree with arghhhhhhh…please stop this kich kich

      • Danish

        was that for me??
        manners??

        • Sajjad Khan

          NO I think they are talking to Propakistani.. and Govt of Pakistan…

  • Ahmad

    Hi, can you guys tell me is that LTE thing same to 4G? So we are going to get LTE and 3G in Pakistan? Sorry for being stupid.

    • Syed Zuhair Khalid

      its ok u r stupid my friend

      • QasRoX

        the guy is right 4G does not necessarily mean LTE

        • PeeDroid MiNi L420

          All Three Of You Are Stupid..
          BC’o 3G 4G LTE Ka Pata Nahi Ha Tain Tain Karney Ajatey Hain ProPakistani Pe..

          • Muhammad Qaisar Khan

            Why You All have like Fighting behaviour with each other??

            • saliraza

              Bcuz they are Pakistani

          • ap kia 3g 4g ka diploma lay kar yahan tain tain karnay ayay ho :P

          • Jin

            (Y)
            Lolz!!! :P

          • QasRoX

            now you of all people a Droid urine will tell me what 3G, 4G & LTE are

    • M Imran

      4G seed can be achieved with the enhancement of 3G network, but LTE is latest technology which provides true 4g speed.

    • Muhammad Aamir

      LTE is a type of 3G.

      • Mohammad Ahmed

        oper say he aye ho aap bhai saab.

      • Rizwan Yaqoob

        LTE stands for Long Term Evolution. It’s a term used for the particular 4G protocol that delivers the fastest mobile Internet experience, true 4G.

    • Rizwan Yaqoob

      LTE is improved network over 4G with increased speed just like EDGE is superior to GPRS and HSPA is improved network over 3G with increased speed.

      At a glance:
      GSM (Global System for Mobile Communications) 2G — 9.6Kbps
      GPRS (General packet radio services) 2.5G — 35Kbps to 171kbps
      EDGE (Enhanced Data rates for GSM Evolution) 2.75G — 120Kbps to 384Kbps
      UMTS (Universal Mobile Telecommunications System) 3G — 384Kbps to 2Mbps
      HSPA (software upgrade to UMTS) 3.5G — 600Kbps to 10Mbps, averages 1-3Mbps
      WiMAX/LTE “4G” — 3Mbps to 6Mbps average, 10Mbps+ peak download speeds.

    • LTE seems a type of 4th generation networks (4G)

    • Road of network generations

  • Ejaz

    Tough time ahead!

  • LTE Lover

    Propakistani please also publish the authority letter from all 5 mobile operators for Mr. Ricardo or TechPolis for representing them. Big conspiracy guys beaware!

    • Silent Observer

      What do you expect from Aamir ata ;) conspiracies, sensationalism and making something out of nothing :) beware of his posts.

      • PeeDroid MiNi L420

        Te Tu Ethay Aambh Lain Aanda Aain??!!!
        Na Aaya Ker.. Chaval Jai Na Howay Ta!!

  • Rafay Ali

    Ker lo gal. Fer rola pe giya, main avain hi khush ho riya si :-( :-( :-‘

    • Muhammad Qaisar Khan

      Men be :P

  • DJ

    kash k aisa hota :)

    “Finance Minister Ishaq Dar, Minister of IT Anusha Rehman and PTA Chairman Dr. Ismail Shah form a dream team that any government would like to have running the affairs under their responsibilities. It is now in their hands to assure that spectrum auctions will be successful. Much work is still to be done, but it must be done for the sake of the common person in Pakistan.”

  • Adnan

    bhool jao 3g ko sprite 3g piyo

    • PeeDroid MiNi L420

      Apki Baji Ka Khokhay Pe Chaltey Hain Phir..

  • Muhammad Qaisar Khan

    Yar Koi Urdu men bta sakta hai yahan kia likha hai please

    • Waqas

      ye apke bas ki baat nahi, behtar he na hi samjhein

      • Kimmy Jimmel

        You ridiculed him just because he wanted to know in Urdu? When you asked your mum about ur dad’s name which was in urdu, ur mum replied “ye apke bas ki baat nahi, behtar he na hi pochein”

        • Edward mayya

          good shot boy :)

          • Anaar Kali

            Embrace !! Edward Mayya is interested in Pakistan 3G/4G network

    • PeeDroid MiNi L420

      Yar Copy Paste Marde Google Translator Pe.. Translate.google. com
      Ek Taraf English Select Kar, Dusri Taraf Urdu!!

      • Muhammad Qaisar Khan

        thanks

    • Edward mayya

      Bhai jan ye 3g or 4g license ke auction ke hawale se bataya gya
      3g ya 4g ke auction ke bad sims pe internet ke speed main izafa ho gye ga or video calling or bhe bht se saholiat musayar ke gye ge

      or es post man kaha gya he ke bht se companies license khardene ke lye tayar hen or ye auction 2 se 3 mahennon man ho gye gam

      • Muhammad Qaisar Khan

        Itna to mujhe bhi maloom hai bhai bus itni ziada english parrhne ka dill nai kar raha tha

    • Bilal Iqbal

      is ka matlab hay k operators chahty hain k kuch paisy bach jain.. 3 ki jaga 5 license hon ta k muqabla kam ho… india main yai sab drama ho chuka hay.. is liay operators ab dhayan sy rahty hain..

  • Rashid

    world is moving into 5G and in pakistan they fighting in getting 3G launched….shows how far we are from rest of the world.

    • Mani

      Brother can u tell me which world is moving into 5g?

      • Majid

        South Korea announces the new technology 5G
        This technology is reportedly 10x Times faster than 4G LTE
        With a shocking speed of 800 Mb in 1 Second

        • Mani

          Thanks Majid. Is that open to use now? Impressed by speed.

          • Majid

            Successful testing , approval required ……

    • PeeDroid MiNi L420

      Teri Ba Ba Nu.. World Is Moving World Is Moving.. Pa Yan Yaa Ka.. Bak was Band Kar Apni!!
      Ja Ka Engrazi Likhna Seekh “World Is Moving Into 5G”.

      • Muhammad Qaisar Khan

        na buri baat larrte nai hen

      • Saira

        tameez say ulla kay pathay…maroun gee

        • PeeDroid MiNi L420

          Teri To Sub Ne Maari Hui Ha Na :P “MISSMale”

        • PeeDroid MiNi L100

          Marwana To Teray Liya Aam Baat Ha.. Kamini.. Aainda Se Gali Na Nikali!!

          • Saira

            Kaminay

    • Bilal Iqbal

      5G is still in labs and testing phases.. there is no official handset/ device commercially launched for it. it will take time to commercially launch it. also its spectrum is of ultra high frequency over which scientists have lot of concerns… all these issues are to be addressed… lot of countries are over 3g and few on 4g… Allah ka shukar ada kro and sabr kro

  • Omair Ahmed

    Okz Here is your Partial reply:

    1st – Tax is 19.5 % shall remain 19.5%, will not decrease to anything lesser
    than 19.5% (what is there that is still causing conflict? or do they mean 19.5%
    has been imposed yesterday? It was imposed many MANY months ago and everyone knows it wont decreased whats the fuss is all about?)

    2nd – “To give operators flexibility to deploy 3G and 4G, spectrum
    associated with both should have flexible roll out obligations. ”
    Now what that supposes to mean? That government should give 5 years just to
    cover Karachi? or 15 years to cover tehsils? isnt timeframe of 1 year (new) or
    6months (old) not enough when every teleco is already shifted to 3g?

    4th -” Future revenues resulting from services provided with this
    spectrum will be in Rupees but the cost of the spectrum is in US dollars”
    What difference does that make? Instead there should have been provision
    like 295million $* Pak rate * Inflation per annum in reduction of worth of money?
    Wont it be same as $?

    5th – “only potential new entrant could bid (850)” Are we auctioning
    2g again? Or just for new entrants? Atleast make sense in your arguments? Or
    you are saying first to Bid 2G again? Then after 50 year start 3g auction?
    ..

    6th – Ofcouse new technology means NEW license.Even in india/England etc..
    there were separate license were introduced and whats wrong with separate
    license for 2g/3g/4g ?

    7th .. Well what a shame, he has not even talked about Internet
    blockage in Pakistan, censorship, rights, protections etc.

    • Osama

      so apko bht saray aitrazaat hain dear well that is good for furthur/……

    • PeeDroid MiNi L420

      Bhai Tum To Pro Nikley :P

    • Bilal Iqbal

      the points discussed above, were also into my mind while reading IM few days ago…
      taxes and duties are already fixed over sales and services so what’s complicated into it…
      roll out time period is of keen importance because in recent time.. Wateen roll backed its operations from Faisalabad instead of spreading into more areas and just continued working in big cities to earn maximum revenues …it should not be done with 3G/4G… however few months might be given. even some operators have already deployed 3G equipment in major cities…
      USD is best linked with inflation… either an inflation ratio would be attached with PKR or it would remain in USD..
      850 MHz slot for 4G can be attained by any 3G winner or for new entrant getting 2G ( it would be a relaxation but i don’t think any new entrant would go for 2G instead they would be interested in next gen)

      Their main focus is to save some amount.. they have observed Indian auction for next gen and learnt that tight competition at the time of auction caused artificial hike in license prices and telco’s had to bear financial loss… prices of 3G services remained high and adoption rate remained low as compared to their expectations…

  • Fayaz Ali

    Not Again…. It’s Pakistan Telecom operators who wanted to delay this auction like they did before. Whats the big if they hey are paying taxes, they are also making profits. Looks like they are afraid of new entrant and they are teaming up against Pakistan nation to save their own money with lame excuses.

    • Omair Ahmed

      Completely agreed. Monopoly of PTCL would also end along with Expensive GPRS shit packages (with no speed).

  • Kimmy Jimmel

    What a circus. If these operators dont like the terms, they should not bid. Simple as that. And they use a spread sheet to calculate future returns? hahhaha how ridciulous and moronic. That shows the exact true ooqaat of local operators. Bunch of illiterate nomads.

  • Some points are valid but like always I must say out ladli telecom companies awam kay sath hakomat ko lotnay per bhi tuli hoin

    • Usama Ahmed

      Hakomat ke pass konsay apnay khazanay hotay hein. Woh bhe awam se tax le ker agay deti hai.

      • hakomat kay apnay tax aur telecom companies kay apnay tax (maintenance fees call connect fees call centre maintenance fees blah blah)

  • Monster

    3G wo b Pakistan me…???? ho he ni sakta :-P

  • payinggust

    last govt ko dhaka marny datay to aj sub 3g 4g use kr ray hoty……

  • shoaib Mohammad

    SHOAIB MOHAMMAD FROM REHMAT ABAD KARAK
    Finally, an important element in the environment for the auctions is taxation. In defining how much they are willing to pay for spectrum, operators run an Excel spread-sheet with the potential returns over the period of the license (currently 15 years, better if 20 years).