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Telstra has received clear signal of change in policy direction from Canberra
Last week, an unprecedented $43 billion plan to build a next-generation national fibre network was announced by the Australian Government. The announcement is a change in direction by the Government, which is now seeking a public-private partnership to deploy a fibre-to-the-home network covering 90% of Australians in the next eight years. The paper also outlines new measures the Government and regulatory bodies will pursue to foster greater competition. The move has great implications for incumbent operator, Telstra, now facing a very different competition landscape and downward pressure on its stock price.
A key new addition to the toolkit of regulators is functional separation, where the incumbent operator (owner of the network) is required to create a separate network unit which handles essential network services to other providers and to the incumbent’s own retail units at the same prices and using the same non-price terms and conditions and processes.
The Feb/March edition of the journal Telecommunications Policy contains an article titled “Does smallness affect the success of liberalization? The case of Cyprus“. The article is very insightful in outlining why we have to pay attention to regulation. The liberalization process is complex and attempting to merely duplicate solutions from other countries without careful consideration of local conditions, will not result in desired outcomes:
The examination of liberalization in Cyprus shows that despite the NRA enforcing all regulatory measures recommended by the EU model, a very strong incumbent provider dominates in all markets. The progress of competition has been sluggish and new entrants, struggling for survival, have acquired small market shares.
The following table, from the same paper illustrates just what is meant by trying to avoid ‘one-size-fits-all’ types of policies. It’s packed with information, so you should try to take a moment to understand it. Key facts contained are the year in which liberalization started in a particular country, penetration rates for Internet under monopoly and then under competition, the number of operators in a country, and the incumbent operators share of the market 4 years after the start of the liberalization process.
(If above information is difficult to read, please click to open larger image)
The author is drawing comparison between large economies and small ones. The data reveals that small countries, under competition, did not manage to achieve high levels of internet penetration and incumbent operators managed to hold onto a large portion of the market share.
Just some things to think about as we get underway with our own efforts at liberalizing the telecommunications sector.
The recent round of deregulation brings promise (Digicel launches in two weeks), but the internet is still an area of uncertainty because the monopoly license on the sole internet gateway (Southern Cross Cable) has not been challenged. And more importantly, FINTEL seems to have been able to hold off efforts to deregulate in this area because it is on the hook to the network owner C&W, soon to be acquired by AT&T.
FINTEL is well aware that to challenge their dominant status, govt. would have to pry control of the gateway from them–at an estimated price tag of $300 million, that is out of reach of Fiji Govt. finances.
Additionally, investing in a competing new cable running to say American Samoa, Hawaii, or New Caledonia would come at a price of about $100 million, which is also out of reach.
Annnouncement this week of Google’s investment in a new satellite business venture that seeks to provide broadband internet access at low and reduced rates to Africa, Latin American, and Asian countries offers a great deal of promise to Pacific Island countries.
While the O3B website does not list the Pacific as an area where they will operate, we can only cross our fingers that when they launch their satellites in 2010, the Pacific will be part of the coverage. The concept of satellite-based 3G wireless internet backhaul to get ISPs up and running in developing countries is extremely exciting and offers hope to the 3 billion people who still do not have internet access.
See also my previous post on how regulators can enforce ‘functional separation’, which would have to be done in Fiji to pry loose Fintel’s grip on internet backhaul in Fiji.
Next post: How mobile usage might affect the move toward expanding internet infrastructure in Fiji.
Forwarding an email from a friend of this blog. Fiji will have to consider making a similar investment.
Source: Pacific Magazine
Worldwide map of under-sea internet cables
02 SEPTEMBER 2008 NOUMEA (Pacnews) —— Internet connections in New Caledonia have been given a significant boost on Monday when the newly-installed undersea fibre optic cable was officially commissioned, reports Oceania Flash.
The 2,200 kilometre cable, nicknamed “Gondwana”, now links the French Pacific territory to Sydney (Australia), with an added bandwith and a much-awaited alternative to the satellite-only connections.
Local post and telecom company OPT General Manager Jean-François Ollivaud said the investment was in the tune of some six billion French Pacific Francs (US$75.5 million).
The cable was installed earlier this year by French company Alcatel Lucent. The investment required OPT subscribing a loan of some
US$50 million.
Internet users can now experience a much faster connection, up to seven times faster than the current speed.
OPT is now offering cheaper rates, which are also reflected in the new rates offered by the four local Internet Service Providers.
But the average connection for a speed of 500 kilobytes per second (kbps) is still 10,000 French Pacific Francs (US$25). It also means that for the same price, subscribers can now double up their speed.
However, OPT is now planning to go further in the price reduction for the less favoured, with a plan to introduce a “bottom” access to ASDL broadband at a speed of 128 kbps for about US$50 a month.
New Caledonia’s government spokesman Pascal Vittori said the main objective of the new cable was to allow a drop in the cost of Internet, therefore a wider access for a wider fringe of the population.
In French Polynesia, the local government is also seriously considering a similar cable link to Hawaii. The investment cost has been valued at some US$122 million.
Meanwhile, in the third French Pacific territory, Wallis and Futuna, the local OPT has also announced last week a new development: it now has its very own domain name, the .wf (dot WF).
Before that, a typical Wallis and Futuna-hosted e-mail address would end with @wallis.co.nc, a clear sign of a dependence upon New Caledonia…….PNS (ENDS)
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