By Ahtasam Ahmad
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wo decades after the 2002 Telecom Policy ushered in the mobile communications revolution, the telcos find themselves in search of an unknown path into the future. Their business model for two decades was centered around providing voice and short messaging services for a growing consumer base. With the rise of social media platforms, and the increasing speeds at which their system is able to operate, data has emerged as the new frontier and none of them is sure how to turn it into a profitable proposition. This is a dilemma unlike what most other businesses face. Their own investments are rendering their own business model obsolete. Over the past decade, they have invested more than $2 billion in purchase of high speed spectrum and installed the required equipment to provide 4G services to their customers, but in the course of doing so, their own revenue base has been eaten away as the higher speeds have made it possible for their customers to make voice calls and send short messages without using the telcos own service. Today the telecoms are searching for the business model that helps carry them into the new world that has been ushered in by the proliferation of high speed telecommunications. Two decades ago nobody thought that one day telecoms would be looking at ways to process payments or manage bank accounts, provide streaming content or operate Super Apps to provide myriad services to their customers like hailing a cab, making a restaurant reservation or purchasing cinema tickets. Today all this and much more is being looked at because, as telecom executives put it, they cannot remain a “pipe” connecting two individuals for much longer. They must branch out into other services. Once known to be the core of telcos, the voice and texting services have seen a
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decline in importance as more and more OTT players like Whatsapp and Facebook enter the market. As per PTA annual report 2020, “10% decline in total ARPU occurred because consumers shifted away from traditional voice services.”
The willingness to change
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EO of Jazz, Aamir Ibrahim while he was on a panel discussion arranged by Tabadlab last year stated, “Jazz was a telecom company. Today we are a tech company and in the future we’ll be a data company.” However, he is not the only one to foster this ambition, Irfan Wahab, the CEO of Telenor, in an interview with Profit stated, “The digital economy, it’s a proven thing, will generate most of the wealth in the coming decades. ICT sector exports, young freelancers, startups all have to rely on this and we acknowledge the added responsibility and are committed to that.” These statements and a strategic emphasis on shifting the telecom business model is not new. The search for new business avenues by Mobile Network Operators (MNO) has picked up ever since the digital revolution hit the Pakistani market. A testament to this change was back in 2016 when Jazz launched Veon, an all-purpose app where users could do almost everything using mobile phones like news feeds and self-serving mobile top-ups and cellular bill payments. Though the app proved to be a failure, it underpinned the importance telcos were placing on digital services to replace their core business “Cellular”. The Cellular services have two components; Data and Voice. The demand for data services continues to grow with ample space remaining in the market for MNO’s to acquire. As per PTA, the Mobile Broadband Penetration is around 50% in Pakistan which is comparatively low compared to economies
