The National Economic Research Associates Inc. (NERA), a renowned U.S.-based consultancy firm, has endorsed telecom operators’ proposals for a more effective 5G spectrum auction in Pakistan. The recommendations include adopting extended payment terms, reducing reserve prices, and transitioning to rupee-based pricing to encourage participation and ensure the auction’s success.
Highlighting critical issues, NERA warned that inflated spectrum prices could reduce competition, stifle innovation, and result in higher costs for consumers. The firm emphasized that even from a revenue perspective, lower spectrum prices could yield higher long-term government earnings by fostering a thriving telecom sector.
NERA also pointed out that Pakistan remains one of the most spectrum-starved markets globally. The GSMA Mobile Connectivity Index Report 2023 ranks Pakistan lowest in South Asia for spectrum allocation. Key challenges contributing to this include delayed auctions, exorbitant base prices, dollar-pegged spectrum costs, and a limited demand for mobile services due to inflation and high taxes.
Additionally, NERA stressed the need to improve fiber optic infrastructure and accelerate smartphone adoption. With only 15% of mobile towers equipped with fiber backhaul, the reliance on microwave networks hampers 4G and 5G performance. Encouraging the adoption of affordable, 4G- and 5G-compatible smartphones could unlock significant economic benefits, as only 1% of devices in Pakistan currently support 5G.
The firm recommended fostering infrastructure sharing among telecom operators to enhance profitability and affordability. This aligns with the federal government’s recently approved Telecom Infrastructure Sharing Framework, which promotes fair sharing of resources.
To ensure the 2025 auction’s success, NERA proposed releasing the full 190 MHz spectrum at 2600 MHz, resolving pending litigation, and extending payment terms similar to practices in Vietnam and Indonesia. By addressing these challenges, the auction could signal Pakistan’s readiness to embrace digital transformation and establish itself as a competitive player in the global digital economy.
