TechLahore

Our earlier piece on Pakistan having the world’s largest WiMAX network attracted quite a bit of attention. In addition to other places, it was cited by democracyarsenal.org, which is part of the US-based National Security Network… but that wasn’t particularly helpful as an introduction, was it? Sort of reminds me of the old where-is-your-house?-By-the-mosque-But-where-is-the-mosque?-By-my-house joke! So I’ll let the National Security Network website do the talking:

“NSN is dedicated to developing innovative national security solutions that are both pragmatic and principled. We believe in countering emerging threats by drawing on the best traditions of American foreign policy: a strong and flexible military combined with shrewd diplomacy, the effective use of alliances, and an unwavering commitment to America’s basic values.”

Anyhoo, Shadi Hamid wrote this piece as a follow-up to my earlier article, and raised an important question. Is development occurring in Pakistan inspite of its government? Are all these technological achievements mere accidents outside the positive feedback loops that can enrich and develop society as a whole?

So I took a crack at addressing Shadi’s question. Here’s the comment I responded with:

The youngest Microsoft Certified Professional in the world being a Pakistani can, perhaps, be an “accident”, as you put it. Having a fibre network spread across a country the size of Pakistan can not. Having the largest WiMAX network in the world can not. etc. etc.

I won’t get into a detailed analysis of all the 15 points mentioned in my original blog post, or even a re-cap of why Pakistan might be one of the world’s best locations for an IT company, but let me take a crack at one item from that list of 15.

Why is it that Pakistan has the world’s largest WiMAX network? Was this truly an accident or can this be seen in a larger political/developmental context? And, what does a WiMAX network really even mean for a country like Pakistan?

First off, both companies that have competing WiMAX installs in Pakistan (Wateen and Mobilink) are head quartered in the Middle East. Wateen, which is a UAE “Sheikh owned” company, has invested billions of dollars in Pakistan. This investment did not accidentally make its way into Pakistan. It is, in fact, the result of a deliberate political decision made in many cash-rich countries of the Middle East, post 9-11. The Arab Sheikhs no longer look upon the West as a very safe place to park their capital, and as such, they have diversified. Hundreds of billions of dollars of their money have been invested in developing Muslim countries like Pakistan and Egypt. I won’t bore you with details of the close-to-$75BN investment UAE real-estate developers have committed to Pakistan. For me to make my point, it is enough to say that the money that fueled the world’s largest WiMAX network came to Pakistan because 1) Pakistan deregulated the Telecom, IT and other sectors, which were attractive to foreign investors given Pakistan’s demographics 2) Post 9-11. trillions of dollars of Arab money seek a safer refuge than what the west offers 3) Pakistan in particular attracts a lot of Arab money because the returns and growth in sectors as diverse as telecom, pharma, real estate and household goods – have been spectacular and 4) Pakistan’s government has some of the most attractive terms for foreign investment of any country, globally. For instance, an 18 year 100% tax holiday on IT companies, 100% repatriation of profits, 100% foreign ownership etc. etc.

The WiMAX story is, then, as much about post 9-11 politics and official Pakistan Government policy as it is about technology.

Now on to another aspect – are these just numbers quoted in articles or are these developments impacting real people, on the ground in Pakistan? We’ve got this WiMAX network now, but what does it mean for Pakistanis? Well, a lot. A parallel can be drawn to the cellular revolution in Pakistan which has empowered thousands of businesses that would otherwise never have been possible. I won’t cite the usual, direct beneficiaries such as cell phone franchises, repair stores etc. Let me give you a couple of off-the-wall examples.

Several companies in Pakistan have developed GPS tracking technology for both security as well as asset/inventory control and fleet efficiency. None of these companies would be able to produce their innovative hardware in places such as Hall Road, Lahore, without access to cheap SMS (text messaging) capabilities delivered by networks such as Wateen’s Warid, Mobilink or Telenor. The economics of a proprietary system simply would not have worked. Without the kind of country wide, redundant coverage Pakistan offers, the system would be useless. Only because you have all the necessary ingredients can you build these companies and create hundreds or thousands of well-paying jobs.

But these are larger companies that provide services to other large companies, or individuals who can afford the extra expense. How have cell phone networks impacted the ordinary man, beyond the city-to-village connectivity, or the PCO small businesses? Here’s an interesting little case study to consider. There is a small startup in Lahore that is in the movie rental business, except they have a unique spin on the concept. They deliver movies to the customer’s home, typically within 30 minutes of receiving an order on the phone or via their website. The business works because their motorcycle-riding delivery folks carry a few dozen of the most popular titles with them at all times… and they have a cell phone. When a new order comes in, they are simply SMS’d a delivery address and the name of a title. When they make a delivery they SMS a code back that allows the “HQ” to determine which delivery person has what movie remaining in their mobile “canvas bag” inventory. Without cell phones, this business would not exist. If SMS/calling rates in Pakistan where what they are in the US, it probably wouldn’t be able to make money. It is only because Pakistan has excellent cell services at cheap rates, that this 10-20 person company exists and thrives.

As was the case with cell networks, WiMAX will breed its own eco-system of companies and create thousands of jobs. Whether it’s businesses focused on video surveillance, automated ticketing at traffic lights, video conferencing, or telemetry applications in rural areas (output of a tube well) etc. etc.

When you create new jobs, it undeniably has political implications. When you give college graduates with technical degrees an ability to productively apply their minds, in an economy that can capture the benefits of their labour, that too has political implications. When you allow political messages to spread via SMS to 90 million Pakistanis… hmm… now that’s pretty interesting.

Could any of this have happened without the government deregulating the Telecom industry? Not at all. Without the government liberalizing foreign direct investment? Probably not.

What do you think?

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