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A phone call from Islamabad

Mobilink celebrates 20 million customers, and growing fast

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"We advise you to reconsider your need to travel to Pakistan at this time due to the very high threat of terrorist attack and the unpredictable security situation." – Australian Department of Foreign Affairs & Trade

Luckily the UK Foreign Office is made of sterner stuff and simply recommends you stay near large cities and don't travel near disputed areas, unless you have the kind of armed retinue provided for heads of state and the like.

But while Charlie glad-hands, and Tony trades additional aid for support in the war on terror, some of us are over there learning about the challenges of running a mobile phone network in a country where the biggest limitation on subscriber numbers is the innumeracy of the population: it's hard to sell a phone to someone who can't count.

Pakistan is a country trapped between Afghanistan (chaos), India (the enemy) and China (an unlikely, but dependable, ally). Their history is short - the country was only set up in 1947, but they've been busy and managed four successful military coups in that time, each one apparently ousting a corrupt civilian government: this leaves them with little respect for democracy; and an all-powerful army.

Pakistan has little in the way of natural resources, and no particularly successful industries, so survival has largely involved exploiting its location in the international theatre. Some rapid footwork by the current president, General Pervez Musharraf, made Pakistan a US ally in the War on Terror and right now it’s American money that funds the country.

Against this background education has not exactly been a priority, and when funding was largely pulled from the state education system the slack was largely taken up by the faith-based schools that attract so much attention these days: which tend to emphasis religious instruction before numeracy and literacy.

There are about 40 million mobile phones being used in Pakistan right now and the rate of expansion is disconcerting: Mobilink is deploying an average of eight new base stations every day. Unlike Europeans, who hide their transmitter sites, even to the extent of concealing equipment and disguising antennas, having mobile phone coverage in Pakistan is a status symbol: antennas are often painted in company colours, so coverage is clearly indicated.

CDMA (Code Division Multiple Access) is used for wireless-local-loop applications: fixed handsets in the home where copper is too expensive to lay, and gets stolen if it is laid. Only 25 per cent of homes have a fixed-line phone, and most of those are CDMA connections, but for mobile telephony GSM is the technology of choice.

Mobilink is the largest GSM provider in Pakistan, and it will come as no surprise that 97 per cent of its customers are pre-pay, with only corporate customers paying monthly. What is more worrying is that 25 per cent of those customers own more than one SIM, and will use whichever network offers the cheapest tariff for a particular call.

European operators long ago realised that competing on price was not doing any of them any good: much better to have tariffs which are almost unintelligible and compete on services or coverage. In Pakistan mobile phone companies complete largely on price, so profits are cut to the bone and calls are very cheap, especially if you switch networks to take advantage of every discount.

Mobilink might have an Average Revenue Per User in single figures, compared to the $30 or $40 enjoyed by operators in Europe, but they don't have to bribe their customers to stay by offering them a subsidised handset every 12 months.

Handsets in Pakistan are generally sold without connection, at a full retail price: the SIM comes from a different shop or direct from the operator. Churn isn't much of an issue yet, but with number-portability coming next year there is concern that it will grow.

Power supply and fraud are the most serious issues in running a network in a country like Pakistan. Even in the capital city short power cuts are commonplace, and outside of towns the power grid cannot be relied upon. Backup generators provide for most of the transmitters, but that means a local tank of diesel which is an easy target for thieves.

Equally problematic is fraud: cloning is almost as endemic as it was on the old analogue networks. SIM security is generally very good, but while the Pakistan Telecommunications Authority allows the import and export of licensed cryptography, some countries are reluctant to see decent cryptographic hardware anywhere in that part of the world: meaning that Mobilink SIMs don&'t use any cryptography at all. This makes them pretty easy to copy, so Mobilink is forced to run several servers constantly scanning for the same mobile phone number to appear twice on the network: a commonplace occurrence.

But while pre-paid customers are swapping SIMs to get cheaper calls, and enjoying SMS at less than two pence a message, post-paid corporates have access to unlimited data tariffs and EDGE technologies, at least in the cities. And you're just as likely to find yourself speaking to someone whilst they check their BlackBerry as you are anywhere else in the world, and equally irritated too.

Mobilink, like all Pakistani networks, is rapidly expanding both in terms of coverage and customers, but it expects to reach saturation by the end of 2008 when everyone who can count will have a mobile phone. For the rest of the population the future is uncertain, and few Pakistanis seem to hold out much hope that the enormous investment in basic education needed to increase their addressable market is going to come any time soon. ®

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