NERA recommends key reforms for a successful 5G spectrum auction in Pakistan

The telecom sector in Pakistan is hindered by spectrum scarcity due to auction delays, high base prices, and legal disputes, placing it at the bottom of South Asia in spectrum availability.
Starting February 2025, large Canadian telecommunication companies must share their existing fibre internet infrastructure with smaller competitors nationwide.

The National Economic Research Associates Inc. (NERA) has outlined critical recommendations for ensuring the success of Pakistan’s upcoming 5G spectrum auction while addressing the challenges in its telecom sector. NERA advocates for reasonable reserve prices, extended payment terms, and a transition to rupee-based pricing to mitigate risks associated with exchange rate volatility.

High spectrum prices, the consultancy warns, reduce competition, stifle innovation, and harm consumers, ultimately weakening the sector’s long-term potential. Pakistan’s telecom industry is severely spectrum-starved, ranking lowest in South Asia due to auction delays, high base prices, and unsold spectrum in litigation.

To address this, NERA recommends releasing more spectrum, including the disputed 140 MHz in the 2600 MHz band, and resolving market structure issues, such as the number of operators post-mergers. Additionally, it emphasises the urgent need for infrastructure development, particularly expanding fibre-optic backhaul networks, which currently account for only 15% of mobile towers, and addressing the limited adoption of 5G-capable smartphones due to their high costs.

Reforms like the Telecom Infrastructure Sharing framework and measures to make smartphones more affordable are critical for fostering competition and sector growth. NERA underscores the trade-off between short-term government revenue from high spectrum prices and the long-term benefits of a competitive and thriving telecom sector.

It highlights that a robust telecom environment requires sustained investments in infrastructure, wider spectrum availability, and affordable tariffs. By implementing its recommendations, including encouraging smartphone upgrades, expanding fibre networks, and creating favourable pricing structures, Pakistan can maximise the potential of 4G and 5G technologies.

These measures are not only vital for the success of the 2025 spectrum auction but also for ensuring a dynamic and sustainable telecom industry capable of driving digital transformation across the country.