According to the OICCI report on the digital economy, Pakistan is developing slowly in the digital race when compared to its neighbours.
Pakistan has a penetration rate of optical fiber of just 1%, which is much lower than regional peers like Vietnam with a penetration rate of optical fiber of 44.5% and Malaysia with a penetration rate of 32.1%, according to an OICCI report cited by IDATE.
The report noted that only 9% of cell towers are connected to fibre optic, in contrast to global benchmarks of 40% and regional comparisons of 80% in Malaysia and 90% in Thailand.
Despite the fact that the global fibre optics market is predicted to reach USD 8 billion by 2026, only a pitiful USD 150–250 million is invested in this industry, even though it needs at least 10 times that amount to meet demand.
According to the OICCI report on the digital economy, Pakistan is developing slowly in the digital race when compared to its neighbours.
The remote regions and rural areas have a limited footprint in terms of fixed broadband services, with PTCL holding an estimated market share of 70-75 percent until 2020.
The government’s high licensing fees, duties, and challenges hinder the local development of fiber optics, with a 20 percent regulatory duty on importing fiber optic cables in 2022 only serving to increase the costs by 107 percent. This debilitates the telecom sector, rather than fast-tracking it towards more growth.
In order to provide broadband services to more than 2.5 million people in Pakistan’s underserved and unserved areas, the Ministry of Information Technology and Telecommunication (MOITT) launched seven projects totaling more than Rs. 8 billion through its Universal Service Fund (USF), including Rs. 3.5 billion for projects in Balochistan.
It has also allocated Rs. 10 billion for projects that will give 11 million people in 4,025 underserved and unserved areas of the nation access to high-speed mobile broadband.
The only rational course of action is to build on the accomplishments made thus far to enhance Pakistan’s broadband capabilities of penetration by bolstering its fibre optic infrastructure.
The report recommended that the government create a favorable investment environment for local and international investors by providing financing schemes at favorable rates, balancing import duties on fiber optics, increasing the priority of investment in fiber optics, spreading optic fibers to at least 3,100 out of 6,000 union councils, simplifying building and site permits, and promoting new construction techniques such as micro trenching and above-ground laying.
Settlement of licensing disputes between telecom companies should be done to incentivize them to invest in improving the country’s telecom landscape.
Initiatives should be taken to encourage local fiber optic manufacturing, subsidize optic fiber connectivity to unserved Union Councils, and review future USF Agreements to ensure equal and non-discriminatory access to the fiber bandwidth.
USF should ensure that only optic fibers are used in the backhaul to connect towers, and reduce taxes on optic fiber, broadband users, and USF funding. Import duty should be reduced from 20% to 10%, and universal internet access should be tax-free and mandatory. GST should be reconsidered to increase adoption of fiber connected to the home and businesses.