Muhammad Arif Sargana Director (Economic Affairs) Pakistan Telecommunication Authority. Sept, 2016 Islamabad, Pakistan

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1 Muhammad Arif Sargana Director (Economic Affairs) Pakistan Telecommunication Authority Sept, 2016 Islamabad, Pakistan

2 Affordable BB Services o Fast Track right of way o USF to fund BB access in un-served areas o Fast Fiber roll out Availability of Spectrum o o o Immediate auction of spectrum in 2100 & 850 MHZ Spectrum Reframing Spectrum availability for digital Microwaves Suitable Backhaul o o o Improve access to national On-line Services Diversity of routing Load sharing on international capacity

3 Competition in Retail BB Framing Sector specific Competition Rules Incumbent obliged to provide last mile infrastructure Availability of Wi-Fi Hot spots Encourage the development of contents

4 Market Research Organizations (BMI, Gallup, Ericsson Research Lab, etc) International organizations (ITU, GSMA, World Bank, etc.)

5 HH with Computers - 19% HH with Internet access - 24% ICT Skills - Who can Copy or moving files - 60% s with attachments - 45% Transfer file b/w PCs - 25% Using basic formula - 23%

Percentage Wide-spread overage of cellular mobile services in provinces of Pakistan Teledensity in Pakistan 43% of rural population of the country where 3G and

8 68.4 71.7 76.5 60.7 69.1 69.0 20.0 10.0 0.0 1.6 1.7 1.7 1.4 0.4 0.3 0.

6 Percentage Wide-spread overage of cellular mobile services in provinces of Pakistan Teledensity in Pakistan 43% of rural population of the country where 3G and 4G LTE service is available Fixed Local Loop Cellular Mobile Jul-16 Most people in Pakistan have access to basic voice telephony, mostly using mobile phones Moving into an age where mobile use is about more than circuit switched voice and SMS Deployment of Fibre

7 Percentage (Rural/Urban)

26,611 45,153 168,082 413,809 900,648 1,491,491 2101315 2,721,659 3,795,923 Total Broadband

8 26,611 45, , , ,648 1,491, ,721,659 3,795,923 Total Broadband Subscribers 16,885,518 21,186,585 24,810,240 30,966,581 32,415,339 34,544,581 40,000,000 35,000,000 Addition of 31.8 million mobile broadband subscribers since the launch of 3G and 4G LTE services: more than 1.3 million additions per month. 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 -

9 3G/4G Subscribers (In million) Jul-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Jul-16

10 Million Subscribers Cellular Subscribers growth

In Terra Bytes (TBs) Extensive Data Usage on 3G Networks 3G shares % 2G shares % Voice 3% 87% Data 97% 13% 45,000 40,000 2G 3G 4G Total 39821 35,000 30,000 25,000 20,000 15,000 10,000 5,000-33,995 4G

11 In Terra Bytes (TBs) Extensive Data Usage on 3G Networks 3G shares % 2G shares % Voice 3% 87% Data 97% 13% 45,000 40,000 2G 3G 4G Total ,000 30,000 25,000 20,000 15,000 10,000 5,000-33,995 4G Launch 29,765 28,535 23,980 24,434 21,932 3G Launch 18,790 17,942 14, ,634 9, ,704 8,089 4, ,243 1,322 1,887 2,392 2,837 2,583 2,954 3,503 4, ,133 2,857 3,196 1, ,536 Jan-14 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Jul-16

12 (Fixed-broadband subscriptions) 1,600,000 1,400,000 1,366,905 1,506,251 1,479,129 1,200,000 1,000,000 1,079, , , , ,

Diffusion of PCs and Internet access devices Very low digital literacy in an otherwise large population Less digitization of the economic activities Local content availability Limited provision of

13 Diffusion of PCs and Internet access devices Very low digital literacy in an otherwise large population Less digitization of the economic activities Local content availability Limited provision of broadband connectivity to public facilities and offices Web Content, applications ( apps ) & services E-Government Law and Regulatory Policy Upgrade of Licensing RF Spectrum Infrastructure policy Common access/competition /subsidy Policy coordination to underwrite ISP demand in education, health, administration Skills and capacity development

14 1. Much more ambitious goals towards e-inclusion across all sectors of the economy 2. Reaching rural areas by commercial companies, especially mobile 3. Common access and competitive infrastructure needed 4. Funding USFs, direct budget/stimulus & PPP s 5. USF is a key financing instrument 6. Competitive tender to build new backbone &/or access infrastructure 7. Stimulate Private Demand in the ICT Sector e.g., PC initiatives, industry & educational initiatives, local services 8. Can be used effectively for demand side funding e.g., schools ICT 9. Include both ICT and the use of ICT to achieve wider inclusion objectives. 10. Tax/fiscal incentives to network components & build-out

15 Digital Financial Services: The Case of Pakistan

16 Currently: 16% of adults with bank accounts which were 12% in 2008 survey (33% increase). Long term: Universal financial access 2020 Vision: 50% of adults with transaction account Access: Convenient access points to connect those who are excluded Digital Transactional Accounts, with scale and viability through digitization of payments, transactions Increase percentage of adults living within 5 kilometers of an access point by Widespread acceptance networks and interoperability Use, Range of Services: Diverse Product Ecosystem Increased SME lending as % of total lending Capacity and incentives to offer diverse range of tailored financial services with adequate oversight Consumer awareness and literacy to be able to select and use appropriate financial services 1

17 Regulatory Environment Two Regulators- Central bank and Telecom Regulator Working Together Separate Regulations by Both regulators Jointly prepared SBP s Branchless Banking Regulations, 2008 (updated 2011) PTA s Regulations for Technical Implementation of Mobile Banking, 2016 SBP s Regulations for Mobile Banking Interoperability, 2016

18 Third Party Service Providers (TPSPs) and financial institutions that offer m-banking services Provides detailed mechanism for technical implementation of one-to-one and any-to-any model of m-banking Existing models (one to one) will continue with their arrangements without the requirement of separate license A joint PTA and SBP committee to resolve the disputes between the parties, and to protect consumers interest. Operators and TPSPs shall put in place an effective and comprehensive consumer protection mechanism against risks of fraud, loss of privacy, delays in service provisioning etc. to the consumers. Quarterly Review of market dynamics, regulations and SOPs

Bank Alfalah Easy Paisa (Oct 2009) Time pey (On time) (Nov

19 Telenor CM Pak Mobilink Ufone Warid Tameer Microfinance Bank Askari Bank Mobilink Microfinance Bank U- microfinance Bank Bank Alfalah Easy Paisa (Oct 2009) Time pey (On time) (Nov 2012) Jazz cash (Dec 2012) U-Paisa (Jul 2013) Mobile Paisa (Dec 2013)

20 Total mobile banking accounts (m-wallets) -approx. 16 million (35% of the 45 million commercial bank accounts) 375 million annual m-banking transactions Annual amount transacted through m-banking - US$ 19 billion 300,000 m-banking agents all over Pakistan, which are more than 25 times the total number of bank branches (12,000) in Pakistan.

21 350, , , , , ,000 50, Number of m-wallet accounts (in million) (RHS) No. of agents

22 Year Deposits in m-banking accounts No. of m-banking transactions Amount transacted through m-banking accounts (As of end Dec) (during Jan to Dec) Rs. in million Growth (%) In million Growth (%) Rs. in million Growth (%) , ,055 92% % 492, % , % % 802,496 63% , % % 1,352,517 69% ,827 32% % 1,872,451 38% Source: State Bank of Pakistan

23 Low usage of m-wallet accounts Active to total m-wallet accounts ratio is only 40% Mobile Money users are unable to use their electronic money in their daily lives in the same way they use cash to buy their essential daily items Expensive mobile money transactions (mostly through OTC) Lack of merchant acceptance High taxes (16% sales tax and 15% WHT on the earnings of agents). Govt. has also imposed additional WHT on the transaction amount of non-filer. Low Interoperability in payments

24 Thank you

25 Target 1. Target 2. Target 3. Target 4. Target 5. Target 6. Target 7. Target 8. Target 9. Connect all villages with ICTs and establish community access points Connect all secondary schools and primary schools with ICTs; Connect all scientific and research centres with ICTs; Connect all public libraries, museums, post offices and national archives with ICTs; Connect all health centres and hospitals with ICTs; Connect all central government departments and establish websites; Adapt all primary and secondary school curricula to meet the challenges of the information society, taking into account national circumstances; Ensure that all of the world s population has access to television and radio services; Encourage the development of content and put in place technical conditions in order to facilitate the presence and use of all world languages on the Internet; Target 10. Ensure that more than half the world s inhabitants have access to ICTs within their reach and make use of them; Proposed Target 11: Connect all businesses with ICTs. Source: Partnership on Measuring ICT for Development (2011).

26 Accurate, meaningful and objective analysis of ICT indicators help governments to: Design and evaluate ICT policies and strategies Country vs. region vs. world comparison of ICT development Devise means and ways to bridge the digital divide ICT data is the key parameter for investors to make their business decisions ICT indicators help monitor the progress towards becoming information societies. The growth and development of ICT require a continuous review of existing ICT indicators and their definitions.

27 Need for a lead organization on pooling ICT data sources in Pakistan Minimum coordination among stakeholders Overlap in regulatory ambits of FBR, PTA, SBP, PBS (e.g. revenue reporting and tax collection; telecom indicators for GDP calculation) Timely and accurate provision of data by operators Manual data collection and management Discouraging response of industry consultation on data collection

28 Collaboration between Government agencies- under a centralized lead agency MoIT may take the lead role Joint Working Group Regular consultation with telecom operators Automation of ICT Indicators Database On-line data reporting PTA s in-house database Big data analytics Annual Symposium/Conference on ICT Indicators Progress review New data requirements

Yusuf Hussain December 14, 2017

Ministry of IT & Telecom Government of Pakistan Yusuf Hussain December 14, 2017 www.ignite.org.pk 1 Digital Finance Definitions are Still Evolving Financial services delivered over digital infrastructure