Pakistan's spectrum auction should prioritize digital infrastructure over revenue: Association

Pakistan’s upcoming spectrum auction should focus on enhancing the country’s digital infrastructure rather than maximizing government revenue.

The 600 MHz set to be made available in the upcoming auction, including over 500 MHz in the core midbands such as 2.3 GHz, 2.6 GHz and 3.5 GHz, will be essential to addressing the country’s current shortfall.

“Excessive spectrum pricing has serious consequences for industry and consumers. Studies by GSMA Intelligence and others have found a causal link between high spectrum prices and slower mobile data speeds, worse coverage and slower rollout,” according to a document of Global System for Mobile Communications or GSMA.

Unsold spectrum in previous auctions has already led to lost economic growth. For the upcoming auction, the impact of unsold spectrum because of excessive reserve prices will be even more substantial.

A two-year delay to the availability of new spectrum is projected to result in a loss of $1.8 billion (PKR 500 billion) in GDP over the 2025-2030 period compared to a baseline scenario in which all bands are sold. This increases to $4.3 billion (PKR 1,168 billion) in the case of a five-year delay.

GSMA proposed to set reserve prices for all bands conservatively, and lower than in previous auctions, to allow the market to determine a fair price and to reduce the risk of leaving spectrum unassigned.

Denominate all spectrum fees in local PKR, instead of USD, to mitigate the impact of currency fluctuations, the document stated.

It also suggested the government provide payment flexibility with options of instalments over the duration of the license. Any upfront fees will need to be set as affordably as possible.

The document added any license obligations should be carefully considered — in particular, the costs of meeting any obligations should be deducted from spectrum fees. It also asked to commit to a spectrum roadmap to reduce uncertainty about future spectrum availability and aid network planning.

The rising cost of spectrum is unsustainable and poses a major threat to the future development of mobile services. Operator revenue per MHz of spectrum is falling while the bandwidth needed to meet user demand is rising. With the total supply of mobile spectrum set to increase potentially by threefold, the trend of rising spectrum costs is simply not sustainable. For operators to be able to fund sufficient investment in future spectrum and networks change is needed, according to the document.

Currently, Pakistan has among the lowest amount of assigned spectrum for mobile in the Asia Pacific region at around 270 MHz, compared to the APAC average of more than 700 MHz in low and mid-bands. However, the government and the Pakistan Telecommunication Authority (PTA) have made good progress on streamlining spectrum planning and expediting the spectrum supply for mobile.

In a positive development, the PTA will be making available close to 600 MHz of spectrum in key harmonized bands, including 700 MHz, 1800 MHz, 2.1 GHz, 2.3 GHz, 2.6 GHz and 3.5 GHz, in an upcoming auction scheduled in early 2025. This spectrum will be essential to address the spectrum shortfall, support mobile industry development and accelerate the growth of Pakistan’s digital economy.

Past auctions in Pakistan have often resulted in unsold spectrum, for example in 2014 (850 MHz, 1800 MHz) and in 2021 (1800 MHz, 2.1 GHz), leading to reduced spectrum supply for mobile operators. This has contributed to slower 4G rollout and adoption.

Analysis by GSMA Intelligence shows that if spectrum had been fully assigned in previous auctions, additional benefits of some $300 million (PKR 80 billion) would have been realized.