The 3G effect

The auction of 3G/4G licenses last year wasn't only about the PTA generating over a hundred billion rupees, or a fresh stream of revenues for Telcos. The implications of high-speed cellular internet go much further.

Since the launch, popularity of this new internet spectrum has been high. In less than 18 months, subscriber count of 3G and 4G internet has crossed 20 million - 10 percent of our population and over 16 percent of mobile phone users in the country.

Compared to last year, internet penetration has more than doubled in Pakistan. Plus, mobile internet user base is still expanding rapidly - an average month-on-month growth rate of nearly 10 percent in the past five months. To put things in perspective, at this rate, mobile internet user base will double to over 40 million by June.

Researchers have conducted several studies to observe the correlation between growth in mobile internet user base and economic expansion. A Deloitte analysis revealed that in Indonesia (where 3G penetrations at the time of study was similar to that of Pakistan today i.e. 10 percent) a 10 percentage point increase in 3G penetration would result in a 1.5 percent growth in GDP per capita. The study even stated that the more data an average 3G connection used, the greater would be the impact on GDP growth.

Pakistan's late arrival to the 3G/4G game compared to regional economies means that there is a lot of ground to be covered in the internet space. E-commerce is one domain that benefits directly from growth in internet penetration. From being virtually inexistent, the sector has gained a lot of traction since the boost in mobile data speeds. We even had a first-ever Black Friday this year, initiated by a popular e-retailer.

Our e-commerce ventures still have a long way to go though. India, where 3G arrived in 2010, has seven e-commerce start-ups that are valued over a billion dollars. In Pakistan, we don't even have an industry body that can give a formal figure as to how big our market is.

The spill-over effects of a more connected country go beyond just changing the way people shop. It will give a boost to the logistics sector and give birth to new payment gateways, creating more employment for people, revenue opportunities for government and will help to raise the productivity of our workforce.