Internet Disruptions in Pakistan – Impact on IT
The recent nationwide slowdown in internet speed is presenting complex challenges across various sectors, including commerce, healthcare, education, financial services, and public sector operations. The ripple effects of this slowdown are being felt throughout the economy, with both immediate and long-term consequences.
Recognizing the gravity of the situation, the Telecom Operators Association (TOA) has made an urgent appeal to Prime Minister Shehbaz Sharif, requesting immediate intervention to resolve the ongoing internet crisis. The TOA outlined several critical issues resulting from the internet slowdown, emphasizing the need for swift action to mitigate its impact on the country’s economy and digital infrastructure.
Impact on the Telecom Sector
The telecom sector in Pakistan is already under significant financial strain, and the current internet slowdown threatens to exacerbate these challenges. The TOA estimates that the sector could lose approximately Rs. 12 billion annually due to the reduction in internet traffic, as the daily internet usage in the country has dropped by around 6,400 terabytes. This decline in usage is directly linked to the slowdown, leading to a substantial loss in revenue.
Moreover, the reduced earnings of the telecom sector are expected to result in a loss of more than Rs. 3 billion annually to the national exchequer. This financial distress in the telecom sector is particularly concerning because other industries depend heavily on robust telecom infrastructure for their operations and growth. A weakened telecom sector could have cascading effects, undermining the overall economic stability of the country.
Impact on Freelancers
Pakistan is home to the fourth-largest freelancer community in the world, a group that plays a crucial role in bolstering the country’s IT exports. The internet slowdown has had a severe impact on freelancers, putting their projects at risk of termination or even causing them to lose their contracts. For instance, Fiverr, one of the largest global platforms for freelance IT work, has changed the status of Pakistani freelancers to “offline” due to the ongoing connectivity issues. This not only jeopardizes individual livelihoods but also threatens the broader IT export revenue that these freelancers generate.
Impact on Business and National GDP
The slowdown is having a detrimental effect on all sectors of the economy, from education and healthcare to commerce, banking, and financial services. A recent Deloitte study highlighted that internet disruptions in a small country with a population of 40 million, a per capita GDP of USD 6,000, and broadband penetration of 5% can negatively impact the national economy by up to USD 3 million per day. Given Pakistan’s significantly larger population and economic scale, the adverse effects on the national GDP could be substantially higher. The slowdown is not just a minor inconvenience; it is a significant barrier to economic productivity and growth.
Impact on the IT Industry
Pakistan has ambitious goals to grow its IT exports to USD 25 billion in the coming years. However, these aspirations are at serious risk due to the current internet slowdown. Proper connectivity is the backbone of a thriving IT ecosystem, and the ongoing disruptions could undermine the country’s ability to maintain and grow its IT exports. The situation is so critical that, beyond future growth, the continuity of current IT exports is in jeopardy if immediate corrective measures are not taken.
Impact on the Blue-Collar Workforce
The internet slowdown is also hitting 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 are threatening their ability to earn a living, placing additional financial strain on the lower middle class. This segment of the population, already vulnerable, could face significant economic hardship if the situation is not promptly addressed.
Impact on Foreign Direct Investment (FDI)
A reliable and efficient communication infrastructure is a key consideration 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, who may view the country as a risky environment for investment due to its underdeveloped digital infrastructure. The slowdown could thus 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 internet slowdown, the Telecom Operators Association has urged 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. The association emphasized that any delay in addressing these problems could have significant and long-lasting economic repercussions for the country.
The TOA has expressed its willingness to engage in dialogue and assist relevant authorities in finding solutions to improve the current situation. As part of their national duty, 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 highlights the critical importance of a robust internet infrastructure for the country’s economic health and underscores the need for urgent and coordinated efforts to address the ongoing challenges.
