Double taxation and frequent shutdowns limit digital participation in Pakistan | #speakup barometer | Pakistan | DW | 09.04.2019
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#speakup barometer | Pakistan

Double taxation and frequent shutdowns limit digital participation in Pakistan

Higher taxes pose a challenge to digital participation in Pakistan. Beyond a long-term denial of service in marginalized areas, authorities also disable mobile access during times of political or religious sensitivity.

The overall level of digital participation for access: moderate

Internet access and affordability in Pakistan is moderate. Digital participation is significantly limited by poor infrastructure and low Internet penetration rates

— Internet penetration, although growing, is still low
— The tax rates for Internet access are very high
— Parts of country still don’t have Internet access, while others face regular shutdowns
— E-commerce and access to digital payment is still not easy


By April 2018, Pakistan, with a population of over 200 million, had an overall Internet penetration rate of 21 percent, with 44.6 million users. And although that’s a low rate, it is nonetheless a drastic increase for Pakistan over the course of the last few years. According to figures from the Pakistan Telecommunication Authority (PTA), there were around 150 million mobile subscribers (74 percent of the total population), while mobile broadband penetration was just over 28 percent. Although the improvement in mobile Internet has enabled access to people from rural areas,wireless technologies remain concentrated in urban areas, according to the Freedom on the Net 2018 report by Freedom House. The International Monetary Fund (IMF) therefore ranks Pakistan among the 10 countries with the lowest Internet penetration.

In addition to the underdeveloped infrastructure, high taxation also poses a major challenge to Internet penetration. While the overall cost of Internet access has fallen in recent years, a 19.5 percent Internet sales tax imposed by the government of Punjab, Pakistan's largest province, makes it difficult for many to access the Internet. Similarly, the Khyber Pakhtunkhwa (KP) government in Pakistan’s northwestern region imposed a 19.5 percent tax on Internet services, which was challenged by the PTA, but later reinstated by the provincial high court. Shahzad Ahmed, Director at Bytes For All, says the high tax rates are a major impediment for the Internet penetration in Pakistan. "In most of the poverty-ridden areas where people are struggling to just make ends meet, higher taxes mean they cannot afford to pay for Internet services," he says. 

Internet shutdowns and access restrictions

Man looking at his mobile phone in Pakistan (photo: picture alliance)

Pakistan ranks second after India in terms of Internet shutdowns

Pakistan’s government also continues to shut down the Internet during times of political and religious crises. According to Access Now, Pakistan was second only to India in terms of Internet shutdowns from January 2016 to May 2018."There were 19 shutdowns recorded during this time period, of which 11 happened in 2018 alone," says Shahzad Ahmed. In October 2018, the Internet was shut down three times in various parts of Pakistan tosilence a human rights movement, to commemorate a public holiday, and to keep people belonging to a far-right religious party off the street. However, the number of unannounced and unreported shutdowns could be far higher, stresses Ahmed. These shutdowns happen despite the fact that such action by the government was declared illegal by the Islamabad High Court in February 2018 – a decision that was welcomed by the digital rights community. However, that decision was revoked only a month later by the court and the case is still pending. Sophia Hasnain of Linked Things, an Internet-of-things solution provider, says the frequent shutdowns, especially at the human rights protest rallies, are a threat to free expression. "The government denying Internet access to the protestors is nothing short of denying them their basic rights."

Digital Rights Foundation and NetBlock alsoreported the suspension of social media platforms, including Twitter, Facebook and Instagram during protests by the far-right Islamist groups against the alleged blasphemy committed by the previous government. Research conducted by the Bytes For All advocacy group noted that the network shutdown process lacked transparency and caused panic among the public as people stranded outside their homes during the times of crises are unable to communicate with their families. Ahmed is disappointed with the continued practice of Internet shutdowns. "I do not see things changing for better in the near future."

Stagnant growth in infrastructure

The expansion of Internet infrastructure remains stagnant. Pakistan ranks 102nd in global mobile Internet speed and 114th in fixed broadband speed according to Ookla, a speed-testing company. The average mobile download speed is 13.56 megabits per second, which is much lower than the global average. However, Internet speed is still better than Wi-Fi connectivity, according to a study by Open Signal. Meanwhile, since 2017, the Pakistan Telecommunication Authority (PTA) has promised the testing of 5G technologies. A recent draft released by the PTA announced a plan to test 5G technology in certain areas in 2019, ahead of allowing it for commercial use in 2020. Pakistan also lags behind in access to e-commerce and digital payments. "There is no access to PayPal. People use cash payments on delivery that also leads to a black economy as there is no track record of these payment, and hardly any taxes are paid on these transactions," says digital ecosystems builder Saad Hamid.

Newly elected Finance Minister Asad Umar has announced the creation of a task force to bring PayPal to Pakistan. Hamid believes that bringing the service, as well as digital payment services to Pakistan, could revolutionize the booming freelance market in the country.

There are many other initiatives which are nearing completion, such as the Silk and Belt Road Initiative (Pak-China Fiber Optic Project) which is running optical fiber from China to Rawalpindi. The project was launched in 2017 and the government of Pakistan claims it could significantly increase Internet speeds and boost the development of Information and Communication Technology (ICT) in the country. However, digital rights activists have expressed concerns over possible new forms of censorship, based on the Chinese model. "This project, which is shrouded in secrecy, could have devastating effects on the already deteriorating freedoms in Pakistan," says Shahzad Ahmed.

In the Gilgit-Baltistan region of Pakistan, the military-operated Special Communication Organization (SCO) provides telecommunication services. SCO has been trying to gain a license to operate commercially in the country, which could also result in curbing of free expression, digital rights experts fear. 

What experts say

Sophia Hasnain, founder and CEO of Linked Things:

"Government interventions and shutdowns are real in Pakistan. Telecom companies cannot operate in certain areas like Pakistan-administered Kashmir and the Gilgit-Baltistan region. Commercial operations are not allowed in those areas on the pretext of national security, so only SCO is allowed to operate there. That hinders free access to Internet."
 

Shahzad Ahmed, director, Bytes for All, Pakistan:

"To enable more a inclusive digital society or knowledge-based economy in the country, both the private Telecom companies and the government need to do a lot more. In particular, they need to be very cautious about educating their users — the masses — on the perils of the digital age and how to avoid becoming victims to active misinformation campaigns; that is unfortunately not happening at all."

Saad Hamid, digital evangelist and Digital Ecosystems Builder:

"There is no trend of public cafes; people have moved to mobile Internet and it’s affordable to some extent for the urban population. But to bring everyone on board, the government needs to work on free Internet zones and city projects."

 

Recommendations

— End Internet shutdowns and kill switches
The government and Internet service providers (ISPs) must ensure unrestricted access to the Internet across the country. "Shutting down cellular and Internet services create more fear and panic among the public, which should be avoided, says Shahzad Ahmed. Also, suspending cellular services during human rights protests infringes upon individuals right to free speech and the government must not disrupt that", he adds. 

— Access in rural areas
"Concrete steps must be taken to bridge the gap between rural and urban access to the Internet, and by extension, to ICTs," says Sophia Hasnain. Bridging this divide is a first step towards building a society based on equal opportunities — both social and economic.

— Less taxation
Government should promote policies where telecommunication companies and ecosystem players collaborate to extend their reach, says Sophia Hasnain. "The government must avoid engaging in double taxation of the same service."

— Invest in the digital economy
Following the example of neighboring countries, "the government must move towards providing platforms for digital transactions, which would ultimately help the country’s sluggish economy," says Saad Hamid. 

The #speakup barometer is a DW Akademie project that examines the connection between digital participation, freedom of expression and access to information. Learn more at www.dw.com/barometer

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