At last, 3G

The government raises a bit of money and gets a long-awaited industry started

Now we can really start shopping

IN PAKISTAN, as in other poor parts of the world, mobile telecoms are vital to the country's development, bypassing obstructive bureaucrats and bringing services directly to the masses—from banking to voter registration. Yet it is the only country in South Asia that does not have high-speed mobile internet, because only this week, after eight years of delays and regulatory snarl-ups, did it at last hold an auction of the spectrum required to roll out 3G and 4G services.

The year Pakistan's government first talked about auctioning 3G spectrum, 2006, was the year Sri Lanka actually started its services. India held its auction in 2010. Even now, in both these countries only a modest proportion of the population enjoys access to high-speed mobile broadband—but they are far ahead of Pakistan and Bangladesh (see chart).

In 2003 Pakistan's then military dictator, Pervez Musharraf, deregulated mobile telecoms to attract foreign investment. But the civilian administration that succeeded him in 2008 spent years lurching from one crisis to another, and failed to promote the industry. A new government, in power since last June, has faced down protests from opposition politicians and, at last, held the auction.

It could have copied war-torn Afghanistan, which has done without an auction, and simply sold licences at low prices, starting in 2012. It did so on the grounds that the economic boost from introducing 3G should be bigger than the one-off windfall from an auction that might have got mired in corruption allegations.

Pakistan's new government, however, needed cash to replenish its foreign reserves. It has not got as much as it wanted, but a less competitive auction may give the successful operators more of a chance to build a profitable business. They have long been plagued by fickle government policies and tight margins in a market that has some of the lowest average revenues per user in the world, at around $2 a month.

With a crippling energy crisis that leaves its cities powerless for up to 12 hours a day and the villages for longer, and an Islamist insurgency that has paralysed businesses and deterred all but the bravest foreign investors, the country of nearly 200m people sorely needs the boost that high-speed mobile-internet access should bring. A recent study by a British consulting firm, commissioned by the Pakistani government, predicted that by increasing economic activity it could help create up to 900,000 jobs over the next four years, and bring in hundreds of millions of dollars a year of new tax revenues.

Nevertheless, as elsewhere in South Asia, the spread of the mobile internet is likely to be slow, since it depends on people replacing their basic handsets with smartphones, which remain unaffordable for most Pakistanis. So far less than 10% of the country's 132m mobile subscribers have smartphones, according to industry figures. However, Pakistan's mobile operators are playing a long game. Even the local ones have deep-pocketed foreign backers that are prepared to wait for growth to pick up and dividends to flow.