The telecom sector has been declared as a priority area for employment generation and poverty reduction by the government. By issuing new licences in the telecom sector, the indirect employment opportunities would be provided through franchises, vendors and distributors of the telecom companies.
According to available documents, a total of over Rs 30 billion have been generated by the Pakistan Telecommunication Authority (PTA) as an initial license fee from new licences which included mobile, fixed and spectrum for Wireless Local Loop (WLL). This contribution would have far-reaching impact on the national economy.
Previously, the recorded share of telecom sector in the GDP increased from 1.5 percent in the year 1999-2000 to 1.7 percent in 2003-04. The competition in the telecom sector introduced by the telecom watchdog agency is being passed on to the consumers in terms of reduction in tariffs and extension in the overall coverage.
The mobile sector had shown significant growth in the last year. At the end of year 2003, the cellular subscribers were almost 2.4 million that have increased to 7 million by the end of 2004, registering a growth of nearly 200 percent. The unprecedented growth in mobile users can be attributed to series of events that have taken place during the previous year.
This included awarding of licence to two new mobile companies thus further creating competitive environment for the existing cellular operators. These operators started acquiring market share as much as possible by bringing down the prices of new connection to zero rupees.
Similarly, the PTA initiative to reduce activation tax from Rs 2,000 to Rs 1,000, on new cellular connection has also played an important role in increasing the subscriber base, as the benefit was completely transferred to the consumers in the country.
On the other hand, the fixed line sector have also shown significant growth patterns over the year. This has been evident from the increased tele-density, which has reached 2.9 percent from 2.2 percent in year 2000.
The telecom watchdog agency has been working towards increasing tele-density and in this connection, Pakistan Telecommunication Company Limited (PTCL) tariffs have been drastically reduced not only for local, but also for nation-wide and international calls. The PTCL brought in schemes for provision of fixed line connection on easy terms.
The PTA have also issued licences for Local Loop (LL) and Long Distance International (LDI) and it is expected that the tele-density would increase further as soon as new operators start their services.
Similarly, 108 licences are expected to be given out for WLL services which would become a cornerstone in increasing tele-density in rural areas of the country, currently having very low tele-density.
The card payphones sector has also shown a tremendous growth; in 2000-01 there were only 14,400 card payphones in the country, but now the number has reached to 184,669 till July 2004. The growth in this sector is basically due to liberalised policy, competition, reduced regulatory charges and decreased tariffs of telecom services.