Pakistan’s digital future teeters on the edge of a crisis, one rooted not in local talent or technology but in the financial mechanisms that power the internet itself.
Pakistan’s digital future teeters on the edge of a crisis, one rooted not in local talent or technology but in the financial mechanisms that power the internet itself.
The very lifeblood of the internet, IP addresses, comes at an unsustainable cost for Pakistani Internet Service Providers (ISPs). With IPs being purchased directly from the Asia-Pacific Network Information Centre (APNIC), based in Australia, Pakistan is hemorrhaging millions of dollars in foreign currency every year, crippling an already fragile economic backbone.
APNIC is the Regional Internet Registry (RIR) for the Asia-Pacific region, overseeing the allocation of IP addresses and Autonomous System Numbers (ASNs). ISPs in Pakistan, however, must purchase these resources by paying hefty fees in US dollars, exacerbating the ongoing strain on the country’s foreign reserves. This dilemma is further compounded by a set of economic realities that have caused Pakistan’s internet infrastructure to stand on much shakier ground than its regional neighbours.
Across the border, India has solved this problem through a more localized approach. In 2012, India established its own National Internet Registry (NIR), known as the Indian Registry for Internet Names and Numbers (IRINN), under the broader governance of APNIC. This strategic move allows Indian ISPs to make payments in local currency, the Indian rupee, while also benefiting from reduced transaction costs. The creation of the IRINN has enabled India to safeguard its foreign reserves, bolster its domestic digital economy, and ensure its ISPs operate under more financially viable conditions.
This arrangement highlights a major policy failure on the part of Pakistan’s telecommunications authorities. The absence of a similar NIR in Pakistan means that local ISPs are trapped in a costly international payment cycle, further burdened by a 17 per cent Federal Excise Duty (FED), 17 per cent Punjab Revenue Authority (PRA) tax, and additional foreign transaction fees. These costs, which often total thousands of dollars per transaction, are an unbearable financial weight that stifles ISP growth and limits the expansion of internet infrastructure across the country.
In another striking contrast, Bangladesh, classified as an underdeveloped country, enjoys a preferential arrangement with APNIC, paying 50 per cent less in fees for IP address allocations.
This discount, part of APNIC’s recognition of the country’s economic challenges, allows Bangladesh’s ISPs to continue expanding their networks at a fraction of the cost Pakistani ISPs face.
Without strategic intervention, Pakistan risks falling further behind in the digital race, its ISPs burdened by costs that could have been mitigated
For Pakistan, the financial strain is reaching a tipping point. The combination of high taxes, currency exchange losses, and foreign transaction fees places ISPs in a precarious position, forcing many to either pass on these costs to consumers or curtail their operations. In either case, the country’s internet users -- both individual and corporate -- stand to suffer from diminished service and higher costs.
Given the stark contrasts between India and Bangladesh, it is evident that Pakistan must renegotiate its terms with APNIC. Establishing a National Internet Registry, similar to India’s IRINN, could offer a solution by enabling local payments in Pakistani rupees and reducing reliance on foreign currency. This would alleviate some of the financial burden currently crippling ISPs and keep more money within the local economy.
Alternatively, Pakistan could follow Bangladesh’s lead and lobby for a reduced fee structure based on its own economic challenges. APNIC already offers discounted rates to underdeveloped countries, and Pakistan’s economic volatility, combined with the growing digital demand, provides a strong case for similar relief. A concerted effort by the Ministry of Information Technology and Telecommunication (MOITT) and the Pakistan Telecommunication Authority (PTA) to negotiate these terms with APNIC could pave the way for more sustainable internet growth in the country.
Yet, despite the clear need for change, there has been little action from the relevant authorities. The Wireless & Internet Service Providers Association of Pakistan (WISPAP) has repeatedly raised these concerns with the PTA and MOITT, yet their voices have gone unheard.
The current situation is unsustainable for Pakistani ISPs. We are hemorrhaging funds through taxes and transaction fees, while neighbouring countries thrive under better arrangements. The government must act swiftly and decisively to establish local registries or negotiate more favorable terms with APNIC. Without this, the backbone of our internet infrastructure will continue to weaken.
The digital landscape of Pakistan is poised for growth, but unless action is taken to relieve ISPs from these unsustainable costs, the very foundation of the country’s internet infrastructure will crumble under financial pressure.
To secure Pakistan’s digital future, the government must act swiftly. Establishing a National Internet Registry is a viable, long-term solution that would allow ISPs to operate under more favorable conditions. Simultaneously, immediate negotiations with APNIC to secure fee reductions or flexible payment terms would provide much-needed relief.
Inaction, however, is not an option. Without strategic intervention, Pakistan risks falling further behind in the digital race, its ISPs burdened by costs that could have been mitigated with forward-thinking policy and assertive negotiations. The backbone of Pakistan’s internet infrastructure is strong enough to support future growth, but only if it is not crippled by financial mismanagement and bureaucratic inertia.
The writer is the chairperson of the Wireless & Internet Service Providers Association of Pakistan (WISPAP).
