LIFE has been disturbed possibly for the first time in such a way. All businesses across the country are going through a challenging time due to the outbreak of Covid-19 that has enhanced people’s awareness about e-commerce — online purchase of groceries in urban areas.

At the same time, educational institutes are struggling to make up for the loss of study hours through online classes. The overall internet consumption in the country has increased by more than 15 per cent due to higher use of social media mostly by workers and shopkeepers sitting idle in their homes.

The minister-designate for information technology, Syed Amin Ul Haque, said he has already discussed key issues faced by consumers with stakeholders.

“Soon after taking oath, I will hold meetings with industry players. My priority is to enhance the spectrum so that the internet outreach can be increased. Besides, we need to reduce taxation related to data on the industry,” the minister said. “Only after we give something to them, the government can tell the companies to improve their service and invest to increase data speed.”

Lower internet rates and increased data outreach will help promote e-commerce

As pointed out by the minister, high taxes on data and mobile telephony are one of the impediments to the growth of e-commerce and e-businesses. Consumers pay up to 34pc taxes on mobile telephony and data. The company charges Rs223 for a 30GB package, but consumers pay Rs300 due to higher taxes.

All the three main issues can only be solved through initiatives by the government. All the four cellular companies in the country — Jazz, Zong 4G, Telenor and Ufone — have unanimously asked the government to reduce taxation on mobile telephony as well as data to facilitate consumers. The low cost will increase usage, which will help overall economic growth.

Telecom companies have asked the government to take the situation as an opportunity.

“It is clear now that we need to speed up the Digital Pakistan initiative,” said Jazz Pakistan CEO Aamir Ibrahim. “The three main issues that have come up are cash disbursements, transfers etc, meeting the growing data needs, and the limited presence of smartphones.”

There are up to 165 million cellular subscribers belonging to the four cellular companies in the country. Despite higher demand, telecom companies are unable to increase their capacity as they have a limited spectrum.

On the one hand, the government has yet to make any decision regarding the allocation of additional spectrum under the new scenario.

“If the government adds further spectrum probably in equal proportion to their currently allotted spectrum at least for a limited time, we can increase our service to more areas,” Mr Ibrahim said.

On the other hand, the issuance of additional spectrum is facing a deadlock after the policy directive in May 2019 for the renewal of cellular mobile licences for Telenor, Jazz and CMPak.

The government set the per-megahertz (MHz) renewal price for the frequency spectrum in 900 MHz and 1,800 MHz at $39.5m and $29.5m, respectively. But the companies have filed cases in the Islamabad High Court and the mater remains sub judice.

The global body of the mobile phone industry, GSMA, has stated that this industry has demonstrated repeatedly that it generates economic value and social benefit.

GSMA, which represents more than 750 mobile operators worldwide, said that governments consider revenue maximisation through spectrum auctions. But the spectrum allocations at reasonable costs to the mobile industry will in turn have a positive impact on social as well as economic development by creating jobs and increasing productivity among many other benefits.

It is also expected that lower internet rates and increased data outreach will help promote e-commerce. Currently, only 7-10pc of mobile phone customers have Jazz Cash, Easypaisa and Upaisa accounts.

This will help accountholders manage their routine financial matters like the payment of bills and online shopping. The deputy commissioner of Islamabad made an appeal to the residents of the federal capital to opt for online purchases of fruits and vegetables at wholesale rates instead of visiting markets. The shift will also help create some competition for retailers who exploit consumers by overcharging.

Even the Pakistan Telecommunication Authority (PTA) in its latest annual report highlighted that the country’s ICT sector was overburdened with taxes that need to be rationalised.

It added that the impediments to the growth of this sector included the non-availability of the latest technology and networks. This can be removed only through increased investments, which will be possible if the operators are provided with financial comfort.

All stakeholders, including the regulator, support the idea of reducing heavy taxes on the industry and consumers at least in the current scenario. The absence of a minister for IT and telecom for more than three months only delayed a decision in this regard.

Published in Dawn, The Business and Finance Weekly, April 20th, 2020