the-south-asian.com July / August 2006
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Pakistan – Markets in IT & Telecomm Convergent Technologies
the Special report undertaken for the-south-asian.com. The abstracts will be published in parts over the next year. The complete unabridged report is available to interested readers for U.S. $300.00
First published in September 2003
PAKISTAN TELECOMM SECTORS
Information Technology Infrastructure (ITI)
In line with the Government policies to promote IT and Internet in the country, PTCL has taken many aggressive steps to deploy state of the art IT infrastructure and lower the Internet bandwidth prices. In August 2001, PTCL leased STM1 (155 Mbps) capacity on SMW3 directly terminating to New York, USA and established the first high speed Internet backbone in Pakistan.
Information Technology Infrastructure (ITI) Region in PTCL was established in May 2000 to provide IP based WAN connectivity to ISPs, Software exporters and other corporate customers.
In May 2000 total International connectivity of ITI region was 4.5Mbps and 42 customers had Internet connectivity via ITI region. Since then ITI has increased considerably and the latest status is as follows.
International Connectivity: ITI has at present two 155Mbps links from Singtel, one from its New York PoP [ Point of Presence] via SMW3 cable towards West, and the second is terminated at Singapore towards East, one Simplex E3 from Intelsat and 34 Mbps from BT Concert also via Satellite, total 378 Mbps of international IP connectivity. These international links are terminated on Cisco routers at ITI Karachi PoP.
Domestic Connectivity: ITI has PoPs in three cities - Rawalpindi, Lahore and Karachi. These cities are connected with each other in configuration. Karachi and Lahore have 3 x 34Mbps connectivity with each other whereas Rawalpindi is connected with 2 x 34Mbps links each with Lahore and Karachi. These links are being upgraded to STM1.
Technologies and Hardware: International Connectivity is IP based and terminated on Cisco 7513 routers. Domestic connectivity is both ATM and IP, ATM links are terminated on Cisco BPX ATM switches and IP links are terminated on Cisco 7513 routers. A GSR router is also being installed at Karachi.
A total of 206 customers are connected with ITI network subscribing over 240 Mbps of bandwidth, most of these circuits are ISPs. Other customers include Software exporters,
Educational Institutes and Oil companies etc. Out of 206 customers’ circuits, 64 are connected from Rawalpindi PoP, 61 from Lahore PoP and 81 from Karachi PoP.
Pakistan is currently constrained with only one undersea cable connecting the country with rest of the world. No new cable system would be forthcoming to land in Pakistan within next 12 months or so. This puts a constraint on the backup provisioning for data links. In case of outages on SMW3 cable system, PTCL faces difficulties in routing the traffic on backup satellite links. In recent months, there have been many outages on SMW3 and STM1 link, thus affecting the majority of IT industry of the country. PTCL has lately modified its network substantially and added satellite backup links to its network. This has reduced the outages to some extent but there are still many problem areas within PTCL’s domestic and international networks.
Lately, there have been many denial of service and distributed denial of service attacks on PTCL’s network, leading to choking of the network and degraded services for the customers.
2.9 Intra-City Broadband –
Hybrid Fiber Cable – HFC- Cable TV +High Speed Internet + Others
Multi System Operators - MSO- Pakistan – a $30 –$50 million Project .
2.9.1 Broadcast Media:
[ Data source : Internet ]
The Government announced that in all, 39 licenses will be issued to the private sector for setting up FM radio stations in 21 cities. TV broadcast licenses were granted to two academic channels and two more were promised to be awarded to private sector by Pakistan Electronic Media Regulatory Authority (PEMRA).
2.9.2 Cable- TV
In Pakistan, a country of 145 million people, the only entertainment is Televison [TV] . With about 3 million TV sets in 1997, it is probably correct to assume a total of 5 to 7 million TV sets in 2003. Pakistan Electronic Media Regulatory Authority [ PEMRA] I is the regulatory governing body of TV Channels in the country.
Cable operators pay Rs 20,000 annually to PEMRA for a 1000 cable TV customer base.
Local Pakistan TV Channels are PTV 1, PTV2, PTV3 . The private sector TV Channels are Indus , GEO, ARY Digital, and PRIME. Local cable operators about in all major towns and cities as the cost of entry is low - Rs. 15 lakh is enough to start a 1000 customer base cable TV operation and have a payback period in one year based on an installation fee of Rs. 1000 and a monthly TV charge of Rs. 250 per month.
2.9.3 HFC Cable TV
The only significant entrant into the Hybrid Fiber Coaxial cable [HFC] is WORLDCALL -- The hybrid-fiber-coaxial [HFC] system in Pakistan for WorldCall’s HFC network has cost about $ 150 per subscriber. In India this cost is about $ 50 per subscriber due to lower labor cost . The total Capital [ Equipment ] cost for WorldCall Karachi network of 100,000 house passes is therefore $ 15 million US dollars If a Fixed wireless [ LMDS- 28 GHz / MMDS – 2 GHz] technology is added to this network at a cost of $ 12 per subscriber , the additional system cost is another $ 1.2 million.
The system in Lahore [ Defense, Gulberg upto Mall along Governor House / Queens road is Fiber ] is not as state-of-art as the system in Karachi. Worldcall Multimedia Limited launched its Hybrid Fibre Coaxial (HFC) cable network in the city costing $10 million in 2000. The network is capable of delivering interactive broad band multimedia services, including broadcast video, internet, video-on-demand, pay per view, security services, distance learning, digital audio, telephony, video conferencing, virtual private networks and electronic games. Worldcall envisaged a 500,000 house pass network in 10 major cities of Pakistan, at an investment of $100 million. After Lahore, the company planned to target Karachi, Faisalabad, Gujranwala and Sialkot. According to Lieutenant-General Humayun Bangash (Retd), Chief Executive Officer of Worldcall Multimedia "In a short period of only 50 days we have successfully laid 40 km of fibre optical cable, out of the planned 103 km for Lahore." By March 2001, the lighting up of all 48 optical nodes in the provincial capital would be achieved. Worldcall's planned technology investments include wireless access network to reach areas where PTCL did not have its presence, pre-paid cards, which support nation-wide and international dialing and an internet service provider. The internet service would not only be competitive, but also 1000 times faster than the other ones. HFC network can provide multiple television channel transmission, telephone, high-speed internet access simultaneously. Typically, he stated, internet download speed over HFC network can be as high as 10 Mbps over the conventional copper medium. The proposed service would allow business and individuals to benefit from broad based and internet facility at affordable rates. The same HFC network can be used to provide ordinary telephone and fax service.
Worldcall could emerge as a major telecommunication service provider in Pakistan. Two distinct features of this network are its broadband and interactive or tow-way communication capability. As copper telephone wires have limited information transmission capability, therefore, to transmit large amount of information over wires, such as video signals, coaxial cables, amongst others are used. Worldcall is positioning to capitalise on the business opportunity linked to the rise in internet usage in Pakistan, he stated. State-of-the-art Head-end is supplied by WISI, Germany, and installed in Lahore. Head-end is capable of providing high quality service to a minimum of 60,000 subscribers. Commissioning of 20 nodes out of 48 was to be achieved by December 30, 2000. Coaxial network equivalent to 20,000 house passes has been installed, and 4,000 house drops completed and test service offered to these subscribers.
In Karachi, the Clifton and Defense areas are complete with the HFC systems [using high Quality Corning Leaf Single mode fiber for the main Trunk lines and Cable RG6 for the house passes, Cable Modem Termination Systems –CMTS are from ADC Telecom USA ] ] including Network Management Operations Center. WorldCall’s Karachi HFC system Road show was expected to start by March 2003 end with a media campaign of services such as video-telephony.
2.9.4 HFC- MSO - Cable TV + Internet -- Significant Revenues & Payback.
For 100,000 subscribers for Cable-TV and high Speed Internet [ @ Rs. 1200 for Internet and Rs.300 for Cable TV = $25 per month ], the annual revenue comes to $ 100,000 x 25 x 12 = $ 30 million before taxes. The estimated Project Payback period is about 2 years. Lahore WorldCall Cable-TV subscribers are 35,000 in total, and therefore the number of 100,000 in Karachi is realistic for the first year.
It should also be noted that in Pakistan a Cable-TV operator is not allowed to offer Voice Phone calls via their HFC network. This will require a separate license from PTA and this may or may not happen when the de-regulation policy is spelled out in the next 3 months. It is the intention of World Call’s CEO, Salman Taseer to offer voice services but under a separate Company.
If one adds fixed wireless using MMDS/ LMDS technology at a cost of $ 12 per subscriber, the total Capital cost of this service for 100,000 users will be $ 1.2 million. Keeping another $ 1 million for Operating & License costs, the total cost will be another $ 2- 3 million.
The first year total revenue for Fixed Wireless is potentially $10 [Rs. 600 per subscriber] per month This gives us a total of $ 10 x 12 x 100,000 = $ 12 million. The payback is potentially huge. Assuming that 50% of this revenue is given back to PTCL and Pakistan
Government as Taxes, the $6 million revenue from a subscriber base of 100,000 is significant.
2.9.5 HFC- MSO- Pakistan – The competition heats up.
The main contenders for the infant Pakistan MSO market are WorldCall [21 thousand payphones] and Arfeen Group [Telecard – 50,000 payphones including Fixed wireless payphones in Karachi, Instaphone Mobile Wireless and Supernet - Data network]. In addition WorldCall’s latest HFC services in Karachi are threatening the Jang Group [ Mir-Khalil-ur Rahman] plans for Geo TV. IN addition the Group ARY TV is planning a home delivery shopping service via the ARY membership of 100,000 ARY TV. Both are thinking of putting in HFC Cable TV networks in Karachi.
Other Potential HFC companies entering the Karachi market are Habib Oil and GEO TV . They are both trying to install HFC cable TV and high speed internet access in the affluent suburbs of Defense and Clifton and PECHS.
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