Telecom fund utilisation stalls

Express Tribune

27-03-2025

Chinese authorities have raised the issue of lack of access to telecommunication services in Gwadar. PHOTO: FILE
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Though the Universal Service Fund (USF) has received billions of rupees from telecom firms, it has failed to start a single project to enhance internet connectivity in Pakistan's remote and deprived areas.
The situation has worsened as no representative from telecom operators has been appointed to the USF board of directors in the past two years.
For years, telecom operators have contributed billions of rupees to the USF and Ignite, however, there are no visible signs of how these funds have been utilised in the recent past. The government's reluctance to appoint industry representatives to the USF and Ignite boards reflects misaligned priorities, stalled progress and a lack of transparency.
Sources told The Express Tribune that the total revenue of telecom companies over the last two years was around Rs1,771 billion. Of this, they contributed 1.5%, or around Rs26 billion, to the USF without revenue adjustment.
Telecom operators contribute 1.5% to the USF, 0.5% to Ignite and 0.5% to the Pakistan Telecommunication Authority (PTA).
"We can safely claim a contribution of Rs20 billion to the USF over two years," industry officials said, arguing that despite receiving a hefty amount, the USF has not initiated a single project during this period.
To make matters worse, the telecom operators have had no representatives on the USF and Ignite boards of directors for the past two years.
This shift is deeply concerning as these organisations were initially set up to function with industry expertise to ensure proper infrastructure and digital skill investments.
Industry officials said that telecom operators play a crucial role in network expansion, innovation and service delivery and their exclusion from key decision-making forums could result in inefficiencies, misaligned policies and stalled digital growth. The absence of board members from cellular mobile operators (CMOs) has left Pakistan's digital future in limbo.
According to sources, a significant portion of CMOs' contributions, amounting to around Rs50 billion, remains unutilised in the fund.
They pointed out that previously approved projects had been scrapped, further delaying much-needed connectivity improvements in rural and remote areas. Many projects have been shut down due to funding shortages, which raises concerns about financial mismanagement.
Since their inception, the USF and Ignite have performed exceptionally well when telecom industry nominees were on their boards. However, now, no CMO nominees are on the USF board as the government cites conflict of interests.
Without telecom sector's expertise, decisions are being made by bureaucrats with little understanding of commercial realities, leading to stalled projects.
According to industry officials, telecom operators contribute to the USF in Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (G-B), but these regions continue to suffer from poor network coverage and the lack of service expansion.
Challenging geography, low population density and high infrastructure costs make private-sector investment unviable without USF support. USF subsidies are crucial for maintaining connectivity in these areas, but delays in project approvals have left AJK and G-B further isolated.
Ignite, responsible for developing digital and IT skills in Pakistan, plays a key role in training youth for global freelancing markets, which helps boost foreign currency inflows. However, its recent stagnation has slowed critical IT development initiatives that could have driven digital exports.
It has ignored industry feedback due to the absence of its representation on telecom boards. The lack of industry input could result in missed opportunities in 5G, AI-driven networks, the Internet of Things, cybersecurity and other emerging technologies. It has also failed to make strategic investments in skill-building programmes, hindering Pakistan's global digital competitiveness.
Industry officials say the USF was created to bridge the digital divide, but its recent inaction has left millions without reliable connectivity. The absence of CMO representation in both organisations is not just a governance failure; it is seriously harming Pakistan's digital future. Without CMO nominees, projects and priorities risk being disconnected from real-world telecom challenges.
The telecom industry has called for immediate appointment of CMO representatives to the USF and Ignite boards to restore industry oversight. Without urgent action, Pakistan could fall further behind in digital infrastructure and IT development, isolating millions and missing out on critical economic opportunities.
The telecom sector is willing to invest in the country's connectivity and digital future, but it cannot do so if its contributions remain unutilised or blocked by bureaucratic inefficiencies, industry officials said.
When contacted, a USF spokesperson stated that funds were being spent on ongoing projects, which had been 70% completed. Therefore, he added, work on new projects had not been started in the past two years. However, he revealed that some projects have now been submitted to the USF board for approval.
Regarding the appointment of telecom operator representatives to the USF board, the spokesperson said that the CEOs of Zong and Ufone had been placed on the board. However, a Zong representative told The Express Tribune that its CEO had not been appointed to the USF board of directors.