ISLAMABAD: If the grapevine within the telecom sector is to be believed, the upcoming cellular spectrum auction for the 2,100 megahertz (MHz) band is shaping up to be another ‘one-horse race’.

The spectrum auction advisory committee, headed by Finance Minister Miftah Ismail, has resolved to auction off two 5 MHz bandwidth slots in the 2,100 MHz band for a 10-year period.

Most players in the telecom sector feel slighted that this year’s auction will only fetch them licences for a 10-year period, as opposed to the previous practice of auctioning off 15-year licences.

Industry insiders say the reduced duration will not only make it cheaper for telecom companies to acquire licences at auction, but will also allow the successful party to divert funds (which would otherwise be used to pay for the licence) to updating technical infrastructure.

Since the previous auction fetched $29 million apiece for 15-year licences, a 10-year one would theoretically cost $19.34 million.

In background conversations, officials from companies who have already obtained 15-year licences — i.e. Jazz, Zong and Ufone — objected to this, saying that since the option was never available to them, it would amount to giving one operator an advantage over the rest of the field, as they would have to invest less capital for the sake of licensing alone.

Although the finance minister did not respond to a query regarding the reduced licence duration, IT Minister Syed Aminul Haque insisted there is nothing wrong with reducing the tenure of the licence. “The 2,100 MHz band has been offered for auction be­cause it was available. Besi­des, the duration has been reduced to facilitate telcos, to make it affordable for them to invest,” he told Dawn.

While this looks fair on paper, it has not gone down well with Ufone, which won a 9 MHz slot in the 1,800 MHz band last September.

Hatem Bamatraf, president and group CEO of PTCL – the parent company of Ufone – has publicly opposed the terms of the sale, arguing that it was unfair to ease conditions for the fresh auction.

He is also on the record as saying that Ufone isn’t interested in participating in the upcoming exercise.

The reason for this, according to a senior Ufone official, is simple. At last year’s auction, Ufone acquired around 70.3 per cent of the total spectrum offered. “It’s not even been a year. The company has yet to utilise its full potential,” the official said.

Another concern is that the government is only auctioning the 2,100 MHz band and not the bandwidth left over from the previous auction, in the 1,800 MHz band.

“This (auction) only suits Telenor because their core 4G operates at 2,100 MHz, whereas the other three telcos are operating in the 1,800 MHz band,” a senior telco executive told Dawn.

This means that if Telenor were to acquire the license, they would be able to roll out advanced 4G services without having to overhaul their technical infrastructure, since it already operates within the given band.

But Telenor Pakistan disputes this impression. In a statement issued in response to questions posed by Dawn, the company said the impression that “the upcoming auction is meant to favour one operator is completely inaccurate”.

The statement said that in view of last year’s “failed spectrum auction”, Telenor had requested the government to make the spectrum available at more appropriate terms to all interested parties in a transparent manner.

Frequency Allocation Board (FAB) data shows that Telenor sits on 57.2 bandwidth in various megahertz, a little higher than Ufone’s 55.2.

However, Telenor has a low presence in the 1,700 and 1,800 MHz bands, whereas it enjoys significant space in the smaller 800 MHz band.

The Telenor statement says Pakistan has one of the lowest allocated spectrums in the region, compared to its much higher requirements. “The unused spectrum is of no benefit to anyone, and only a missed opportunity to bring investment and connectivity to the country.”

High-band is suited to densely populated cities and locations that generate lots of mobile data traffic and so need the higher capacity that high-band has to offer. However, high-band coverage is generally limited and is affected by the environment in which it is deployed — for instance, surrounding high-rise buildings.

In contrast, low-band offers far greater coverage and much better building penetration capabilities and is more suitable for less densely populated rural areas.

Telco insiders say that Telenor can easily take advantage of the position it enjoys in the low-band to deploy services along highways – especially those being constructed along the CPEC routes.

Independent analysts, for their part, believe that there is still room for experimentation in this sector. “It makes more sense to launch a cheaper spectrum during these hard times rather than not selling anything for a year or so,” said Amir Ata, an Islamabad-based technology blogger and analyst.

He recalled that when Pakistan experimented with the launch of 3G and 4G technology at the same time during the 2014 spectrum auction, and it was so successful that Zong launched 4G mobile services in the country from the 1800 MHz band.

In addition, the three previous auctions also saw participation limited to one bidder, i.e. Ufone in 2021, Jazz in 2017, and Telenor in 2016.

It was only in the country’s first next-generation mobile spectrum auction in 2014 that all telecom companies placed bids to get a chunk of 1,800 and 2,100 MHz bands.

Published in Dawn, August 20th, 2022