Pakistan Mobile Access Update: Ownership and Sharing on the Rise, Sending SMS is Popular  

Pakistan, like many other developing countries, has seen an explosion in its mobile communications market in recent years. The Pakistan Telecommunication Authority (PTA) reported a 65.4 percent mobile teledensity (The number of mobile phones in use for every 100 individuals)  and a total of 108,894,518 subscribers in June 2011. The number of subscribers has increased threefold since 2005. 

Measuring the number of mobile phone users is challenged by shared use of phones, those who own more than one SIM card, and the ownership of SIM cards by non-phone owners. While the number of mobile subscribers is officially 108 million, according to the PTA, those with phone access might be higher and conversely those with actual mobile phone ownership might be lower. 

This dilemma is illustrated in studies of mobile phone access and use by gender in Pakistan. According to the Pakistan Institute of Public Opinion (PIPO) 2010 Media Report (A note on the data sources used for this brief is provided at the end of the page), there seems to be a large gender disparity in mobile phone ownership (See Figure 1, left).

Figure 1

 Source: PIPO 2010 and 'Mobile Life Pakistan Report : Gilani Research Foundation 2010. Sample sizes for both these figures were different.

However, the 2010 Mobile Life Pakistan Report produced by the Gilani Research Foundation  measures regular use as opposed to ownership. Very different results appear, (see Figure 1, right).

In addition to gender, James Linton Williams, founder of the Popular Engagement Policy Lab (PEPL) talks about similar disparities across income groups on a recent PEPL report. He cites 2009 survey data from LIRN Asia , where they surveyed the poorest 60 percent of Pakistan’s population. The study shows that, of the 109 million people in that bracket, only 40.33 million own mobile phones, but 104.64 million (96 percent of the 109 million) had used a phone in the three months prior to the survey.

Demographically Speaking:
 
Figure 2

Another way of looking at mobile access is to examine ownership as a proportion of population within certain demographic categories- such as age, income and education groups. Figure 2 shows higher education and higher income groups with a higher proportion of mobile phone users than lower-income groups.

Other factors that have inhibited further growth in mobile phone access include continued unrest and an increase in terrorist violence in remote regions of Pakistan, attacks by religious extremists on shops selling mobile services and accessories, and military operations that have displaced area residents, hurting commercial activity.

Regionally speaking , the Khyber Pakhtunkhwa (KPK) province and the Federally Administered Tribal Areas (FATA) are the most volatile and sensitive in Pakistan and have poorly-developed media market (see a note on how the country was regionally divided for the PIPO report at the bottom of the page).  Both these regions have been the site of violent incursions by religious extremists and the Pakistani military. FATA is a semi-autonomous tribal region in the northwest of Pakistan, lying between the province of Khyber Pakhtunkhwa, Balochistan, and the neighboring country of Afghanistan.

As an area of continued insecurity, the NWFP has also seen large-scale migrations of citizens out of this region, which has severely limited commercial activity here. This region is also most lacking in access to commercial radio, television, internet and newspapers, with a rise in easily available militant and terrorist propaganda and media. The KPK residents also have fairly low access to cable television and newspapers.

However the rate of mobile phone ownership in KPK is close to the national average. The PIPO report and the Mobile Life study did not survey the FATA region, but a recent Raabta Consultants’  monthly research report from FATA (conducted jointly by PEPL and InterMedia) shows that the mobile phone access rate is actually close to 64 percent.  For institutions and development practitioners looking to target populations in KPK and FATA, mobile-based SMS campaigns might be a better communication strategy than television or the internet. (see more in next Mobile Phone Activities section)

The lowest mobile ownership rates by province or region are found Interior Sindh  (26 percent- Interior Sindh excludes the more developed Karachi capital region) and the Kalat Makran Zone in Balochistan (21 percent). Both these regions are less remote and more easily accessible than KPK and FATA. However interior parts of the Sindh province are less developed and more poverty stricken than its capital Karachi, and there are similar conditions in the scarcely populated Kalat Makran zone in Balochistan.

Pakistan's Universal Service Fund (USF) was established in 2006 to bridge some of this gap between urban and rural residents as well as between low-high income Pakistanis. It is funded by a 1.5 percent tax on telecommunications operators’ adjusted revenues. Subsidies provided by the USF go toward extending basic telephony and data services.
 

Figure 3

Nationally, Pakistan’s mobile communications market is competitive, with five major service providers. Data from the PTA indicate that Mobilink has the largest market share with 31 percent, followed by Telenor (24 percent), Ufone (20 percent) and Warid (17 percent). Zong, a relatively new name in the market has 8 percent of the market.

Liberalization of the mobile communications sector has spurred market growth. Major sector reforms first took effect in 2004 with the adoption of a new licensing framework, along with new guidelines on how mobile license auctions are conducted. This led to the creation of new pricing models to attract those remaining outside the market, particularly low-income earners who need more flexible and inexpensive services. One such price change was the introduction of packages on a per-second, thirty-second, and per-minute basis. Pre-paid subscriptions (SIM cards) account for 98 percent of all subscriptions.

Mobile Phone Activities:
Most Pakistani mobile users use their mobile phones to make calls, according to the 2010 Mobile Life Pakistan Report. Another activity, known as missed calling, is also popular. This involves dialing a number, and then immediately when the calls gets through, disconnecting it after 1-2 rings and before the receiver picks up in order to save both parties from being charged incoming or outgoing rates.  Many Pakistanis might have predetermined signals that these missed calls  give (for example: a missed call could mean the caller will be home in 10 minutes, or has reached a destination, or will be here to pick you up).  In general it is a free way to communicate.

Figure 4


Sixty four percent of mobile phone users said they send at least one SMS every day. Of these respondents, most sent between one and ten messages a day (see Figure 5).

Figure 5


As mentioned above with respect to the KPK and FATA regions, SMS campaigns could be an effective tool for development practitioners working in Pakistan, or indeed any institutions seeking engagement.

The competitive market has slashed the price of sending SMS messages in recent years. PEPL, in their Guide to SMS Engagement in Pakistan,  said that viral text messaging is widespread. It is common practice for text messages to be forwarded from friend to friend without either knowing the identity of the message’s creator.  The content of these messages is most commonly jokes, quotations, proverbs, news and religious content. 

Another important facet is texters are doing so using Urdu written in Roman alphabet (The PIPO 2010). Sixteen percent text in Urdu using phones enabled with the Nasta’liq script (this is the script for the Urdu language derived from the Persian alphabet) and 18 do so percent in English. The PEPL report also indicates widespread SMS in Urdu and Pashto using the Roman alphabet. 

LIRNEasia’s ‘Teleuse at the Bottom of the Pyramid’ series offers more evidence of reach and communication, even among poorer and less literate sections of society. The data show that eight percent of bottom-of-the-pyramid mobile SMS users typically ask others to write their SMS messages for them. This indicates that SMS can be a tool for the illiterate or those without English language comprehension.  

Figure 6


All this represents a complex yet untapped potential medium that might be used to target audiences and beneficiaries.  Once again, drawing from the PEPL report- a Community for Disaster Affected Communities (CDAC) survey of flood affected Pakistanis and Sindhis that was cited, found that even though close to 23 percent said they had their own mobile phones, only 0.4 percent had received useful information about the floods from an organization. There is a tremendous opportunity to utilize SMS communication for good in Pakistan.
For more information on how to use SMS as a tool for two way communication, see here 

Branchless Banking

Branchless banking (BB), sometimes referred to as mobile banking, has been one of the most talked about and researched development topics in recent years. How exactly governments regulate these hybrid banking and mobile communications services has varied from country to country and is a matter of great debate. The government of Pakistan has been at the forefront of the debate about how best to regulate and guide the implementation of such services. The State Bank of Pakistan (SBP) has spearheaded the government’s efforts to provide a coherent and effective regulatory framework. In March 2008 the SBP issued its Branchless Banking Regulations (BBR) establishing the guidelines for market entry and participation.

In its efforts to expand financial services to the unbanked, the SBP decided to limit branchless banking to bank-led strategies, wherein a bank is the entity that has primary responsible for the customer account relationship and where an agent network and/or a mobile service operator conducts transaction on behalf of the bank. This contrary to the mobile operator-led model where the mobile service provider is responsible for the maintenance of customer accounts. The purpose of choosing to emphasize bank-led BB is because it offers several alternatives to conventional branch-based banking in that customers can conduct financial transactions through a wide range of agents, including mobile network operators, gas stations, and retail outlets. While most BB services have been known specifically for easing the burden of money transfers, bank-led models also have the potential to easily offer more complex financial services. The SBP’s BBR allows for three models of bank-led BB. In fhe first, referred to as “one to many”, a bank offers BB services to any person with a mobile phone, provided that their mobile operator has an SMS pipeline for processing transactions, or transactions are processed through the bank’s network of agents. United Bank Limited (UBL) has begun to offer such services, but on a limited basis. Through its Orion UBL allows any customer of the five major mobile service providers who has registered as an Orion customer to transmit money to family and friends, buy prepaid mobile cards, and view and pay utility bills. UBL reportedly has 250 direct agents registered and operating (primarily retails spaces and pharmacies) and have more than 500 applications in process. In a recent report by the Consultative Group to Assist the Poor (CGAP), UBL is currently signing up retail and mobile service agents to expand its network, ultimately targeting to have some 80,000 agents. [a] The second bank-led model is referred to as “many to many”. This model involves “a central transaction processing system (i.e., switch) that provides total inter-operability, allowing multiple banks to offer services to the customers of multiple agent networks”. The many-to-many model is seen by the SBP as the “the desired situation”, as it resembles an ATM-style system in which all banks and mobile operators are able to process each other’s transactions.The second bank-led model is referred to as “many to many”. This model involves “a central transaction processing system (i.e., switch) that provides total inter-operability, allowing multiple banks to offer services to the customers of multiple agent networks”. The many-to-many model is seen by the SBP as the “the desired situation”, as it resembles an ATM-style system in which all banks and mobile operators are able to process each other’s transactions. However, this framework has not yet been implemented.

The third bank-led model is “one to one”, in which a bank offers BB services through a single mobile service provider or by means of another agency that has a joint venture agreement with the mobile operator. This model is being used by Pakistan’s first large scale BB service, EasyPaisa, operated by Telenor. Due in part by the SBP’s decision to only allow bank-led BB initiatives, Telenor (Pakistan’s second largest mobile operator as of January 2010) took a controlling stake in microfinance institution Tameer Bank in 2008. In October 2009 Tameer Bank with its now parent company, Telenor, launched the over-the-counter services of EasyPaisa. The service allows both Telenor and non-Telenor customers to make over-the-counter bill payments and money transfers through Tameer agents. This service, while not mobile phone based, grants access to financial services to the unbanked who traditional bricks-and-mortar institutions have not reached.

In early 2010, Tameer finally launched its EasyPaisa mobile wallet, expanding its services to savings accounts, insurance and loan services to Telenor customers which they can access over their mobile phones. [b] Tameer has stressed that they are not like most other mobile money service providers, citing their emphasis on bill payments over money transfers. In addition, their agent network is structured so that anyone that has a different mobile provider can be an over-the-counter customer of EasyPaisa. As of mid-January 2010, Tameer reportedly had 4,500 agents operational, with 3,000 more identified. EasyPaisa had processed over 500,000 bill payments and money transfers within the first four months of operations. Use of EasyPaisa is expected to grow as the company’s mobile wallet service is further publicized and more agents become operational. Tameer is hoping to deploy 30,000 agents by 2012.

Though the SBP already has issued clear guidelines on BB, the SBP and PTA announced in November 2009 the creation of a joint committee to work on a unified regulatory framework for mobile banking. [c] These guidelines, if implemented, have the potential to open up new opportunities for other stakeholders, including the introduction of new mobile operator-led models. In a largely rural country of 170 million which has only some 16 million individual bank accounts, there are plenty of opportunities for new players in the mobile money market. [d]

 This report was written by Gayatri Murthy- Senior Research Associate at InterMedia

Notes:

1. Data: The analysis in this article was sourced from 2 mobile reports: the Pakistan Institute of Public Opinion (PIPO) 2010 Media Report and the 'Mobile Life Pakistan Report : Gilani Research Foundation 2010. The former relied on mobile ownership to demonstrate mobile access while the latter relies on mobile use. The distinction is made clear where necessary.  

2. Regions: The PIPO 2010 media survey divided Pakistan into the following regions: Karachi, Interior Sindh, Western Punjab, Central Punjab, North Punjab, South Punjab, Peshawar Valley, Southern Khyber Pakhtunkhwa (KP), Malakand, Hazara, Quetta Zone (Balochistan), Kalat Makran Zone (Balochistan).

[a] “Update on Regulation of Branchless Banking in Pakistan”. Consultative Group to Assist the Poor. February 2010. Accessed March 2010. http://www.cgap.org/gm/document-1.9.42729/Pakistan_Update_03_08_10.pdf.

[b] CGAP, 6.

[c] SBP, PTA to introduce unified regulatory framework for enhancing mobile banking in Pakistan”. State Bank of Pakistan. 18 November 2009. Karachi, Pakistan. Accessed March 2010. http://www.sbp.org.pk/press/2009/PTA-Meeting-19-Nov-09.pdf

[d] CGAP