Telcos Warn Blocking Phone SIMs of Defaulters Can Negatively Impact Digital Inclusion

Telecom operators are raising concerns over the Ministry of IT’s initiative to provide smartphones on installments, arguing that the policy could negatively impact Pakistan’s digital landscape. According to telecom industry sources, two of the four mobile operators have expressed reservations about a key provision in the policy that mandates blocking all SIMs registered to defaulters. They argue that such a measure would not only deprive citizens of their digital rights but also have a negative impact on digital inclusion in the country. The opposing telcos assert that in other countries, governments, not telecom operators, absorb the financial burden of defaults, and they are unwilling to bear the risk without a feasible mechanism to offset potential losses. Currently, the policy remains under discussion as the Ministry of IT has tasked telecom operators with reaching a consensus. The Ministry has finalized the framework and shared it with telecom companies, but the primary sticking points remain the proposed SIM-blocking enforcement mechanism for defaulters and the financial burden telecom operators may have to bear. Some operators support the proposal, while others strongly oppose a centralized system that would lead to the suspension of all SIMs linked to a defaulter’s CNIC. Additionally, telecom operators have raised concerns that they should not be responsible for absorbing the default risk or subsidy costs. The initiative was first drafted in November 2023 and sent for cabinet approval in early 2024. However, the cabinet sent it back to the IT Ministry, directing it to get the policy vetted by the Law Division. Following the general elections, the revised version was presented to the new IT Minister, Shaza Fatima, who then prepared an updated draft with input from banks, fintech firms, and telecom operators. Despite efforts to refine the policy, the lack of consensus among CMOs continues to hinder progress. Without agreement among operators, the policy cannot be presented to the federal cabinet for final approval. According to IT Ministry officials, the main challenge is not the installment-based smartphone provision itself but the enforcement mechanism against defaulters. The IT Ministry and the Pakistan Telecommunication Authority (PTA) can only proceed with implementation once a clear policy directive is issued by the federal government. Telecom operators opposing the plan have suggested alternative solutions, such as allowing higher interest rates or upfront payments to mitigate risks. However, the government remains unconvinced, arguing that installment-based smartphone purchases with high interest rates are already available in the market.