Internet Disruptions in Pakistan: IT Impact
Revised Article: December 2024 Update
Nationwide internet slowdowns are disrupting sectors like commerce, healthcare, education, finance, and public services. The ramifications of this slowdown are impacting the economy both immediately and over the long term. this article is part of our General Blog.
Telecom Operators Association’s Urgent Appeal
The Telecom Operators Association (TOA) has urgently appealed to Prime Minister for immediate action to address the ongoing internet crisis. The TOA has highlighted key issues caused by the internet slowdown, stressing the need for quick action to minimize its impact on the economy.
Impact of Internet on the Telecom Sector
Pakistan’s telecom sector, already under significant financial strain, faces exacerbated challenges due to the current internet slowdown. The TOA estimates annual losses of approximately Rs. 12 billion due to the reduction in internet traffic, with daily internet usage in the country dropping by around 6,400 terabytes. This decline in usage directly correlates with the slowdown, leading to substantial revenue losses.
The reduced earnings of the telecom sector are expected to result in a loss of over Rs. 3 billion annually to the national exchequer. This financial distress in the telecom sector is concerning because other industries rely heavily on robust telecom infrastructure for their operations and growth, potentially undermining the overall economic stability of the country.
Impact of Slow Internet on Freelancers
Pakistan hosts the fourth-largest freelancer community globally, playing a crucial role in bolstering the country’s IT exports. The internet slowdown severely affects freelancers, risking project terminations and contract losses. For instance, Fiverr has changed the status of Pakistani freelancers to “offline” due to ongoing connectivity issues. This jeopardizes individual livelihoods and threatens broader IT export revenue generated by these freelancers.
Broader Economic Impact of Slow Internet
The slowdown harms all sectors, including education, healthcare, commerce, banking, and finance. A study showed that in a smaller country with 40M people, a GDP of USD 6k, and 5% broadband access, internet disruptions could cost up to USD 3M per day. With Pakistan’s larger population and economy, the impact on GDP could be much higher.
Impact on the IT Industry
Pakistan’s goal to grow its IT exports to USD 25 billion is at serious risk due to the current internet slowdown. Connectivity is the backbone of a thriving IT ecosystem, and ongoing disruptions undermine the country’s ability to maintain and grow its IT exports. Beyond future growth, the continuity of current IT exports is at risk if immediate corrective measures are not taken.
Impact on the Blue-Collar Workforce
The internet slowdown also hits Pakistan’s blue-collar workforce hard. Many workers, such as plumbers, electricians, masonry workers, and gardeners, rely on the internet to communicate with clients and secure jobs. The current connectivity issues threaten their ability to earn a living, placing additional financial strain on the lower middle class, which could face significant economic hardship if the situation is not promptly addressed.
Impact on Foreign Direct Investment (FDI)
Reliable and efficient communication infrastructure is crucial for foreign investors. In today’s digitally connected world, the internet is the backbone of this infrastructure. The current state of Pakistan’s internet services could deter potential foreign investors, viewing the country as a risky investment environment due to its underdeveloped digital infrastructure. This could have long-term repercussions, limiting the influx of new foreign direct investment and stalling economic growth.
Call for Immediate Action
Given the wide-ranging and severe impacts of the net slowdown, the TOA urges Prime Minister Shehbaz Sharif to take immediate action. They have called for a thorough investigation to identify and rectify the technical issues causing the slowdown. Any delay in addressing these problems could have significant and long-lasting economic repercussions for the country.
The TOA expressed its willingness to engage in dialogue and assist relevant authorities in finding solutions to improve the current situation. Telecom operators are prepared to collaborate with the government to restore normal internet speeds and ensure the stability of Pakistan’s digital infrastructure.
This crisis underscores the critical importance of a robust internet infrastructure for the country’s economic health, highlighting the need for urgent and coordinated efforts to address ongoing challenges.
