International Telecommunication Union (ITU) has revealed that Pakistan is the fourth cheapest market in terms of the monthly cost of owning a mobile phone. It was also reported that Pakistan has eighth highest taxation for the telecom sector worldwide.
The Cheapest Regions For Using a Mobile Phone
The average cost of owning and using a mobile phone in Pakistan is Rs 222.41 ($2.21). When compared with the rest of the world, prices in Southeast Asia are among the lowest, especially in the emerging telecom markets.
In this list of mobile cost, Sri Lanka is ranked as the cheapest market for using a mobile phone. The average monthly cost there is only $0.97. It is followed by Bangladesh with an average monthly cost of $1.42 and Iran with $2.01 per month. Pakistan comes in at a close fourth.
However, when compared with annual per capita income of the citizens of a country, the Gulf States take the top spot. Per capita income is very high in the Gulf countries, while the average monthly costs for using mobile phones are reasonable. Pre-paid mobile users in these states spend less than 0.3 percent of their annual income per capita.
The average per capita income in Pakistan is $1,513. So, countries with a low general income tend to go for cheaper rates anyway, while telecom operators in countries with high incomes can make more profit by increasing their service costs.
Do the Numbers Bode Well for the Telecom Market?
Experts are of the view that such a trend is unhealthy for the development of the telecom industry. Cut-throat competition and high taxation are a combination that should not come together. This increases the burden on the cellular service providers as lower tariffs and higher taxes mean less profit for these companies.
Mobile companies invested heavily in the 3G/4G auctions in 2014 and then upgraded their networks to new generation technologies and equipment to manage the extensive load. Despite that, the government has maintained a tentative policy which hasn’t helped the telecom providers maximize revenue from the new internet services. The government, national and provincial, has increased taxes on mobile operators and smartphone imports resulting in decreased adoption rates for 3G/4G services.
According to Pakistan Telecom Authority (PTA), cellular traffic has kept on increasing in recent times as mobile operators are now offering more talk time per rupee. The stated reason is that high competition and the threat of over-the-top (OTT) services forces telecom providers to choose this route. While SMS and calls are cheap in Pakistan, internet connectivity cost is comparatively much higher and could cause this rank to go higher in the future.
PTA acknowledges that telecom providers are the backbone of the telecommunications industry in Pakistan. According to the regulator, 3G and 4G services have provided a much needed boost to the cellular sector creating several new revenue generation opportunities.
A recent Groupe Speciale Mobile Association (GSMA) survey revealed that Pakistan stands on eighth number in consumer taxes out of the 110 countries reviewed. These taxes are related to the total cost of mobile ownership include usage expenditure, handset taxes and other activation costs. GSMA states that high taxes are amongst the several major barriers in the emerging markets resulting in slower adoption rates. Lack of network infrastructure, affordability, taxes, low literacy and lack of content are major contributors to a slow adoption of internet services in emerging markets.