"The appointments should be made before proceeding with the 3G licence auction," Chief Justice Iftikhar Chaudhary ruled.
The auction has to be held within 15 days of the appointment of the chairman and members of the Pakistan Telecommunication Authority (PTA), he said.
Chaudhry said there is no organisation that can control grey traffic in the telecom sector worth billions of rupees.
During the hearing, another member of the bench, Justice Jawwad S Khawaja, questioned the government's intention of having a regulatory authority for cellular companies.
However, the process has been hit by delays because the cabinet has to first appoint members of the PTA.
Even Afghanistan, with a weaker economy and more fragile security, has the technology. India too has 3G technology and there is now talk of introducing 4G.
According to reports, a growth in broadband penetration is expected to lead 1.3 per cent growth in Pakistan's gross domestic product.
There is a growing demand for smartphones in Pakistan and the five telecom companies operating in the country believe there is a huge market for 3G services.
