Pacific Microfinance Week 2009

From Pacific Business News Online, we have news on a conference on Micro-finance. There have been many recent posts on mobile phones and the impact they can have on the delivery of financial services. In the Pacific, it is key to unlocking the potential of our people.  Delivery of these services should be a key benchmark for measuring the success of telecom sector liberalisation.

There is a great deal of interest to make this work in the Pacific:

IFC (International Finance Corporation) is the principal sponsor of Pacific Microfinance Week 2009, a week-long series of events, meetings and gatherings of a range of organisations and individuals that share an interest in promoting the provision of inclusive and sustainable financial services in the Pacific. IFC’s Access to Finance programme forms part of a regional Advisory Services program to improve private sector development in the Pacific. The governments of Australia, Japan, and New Zealand are IFC’s donor partners.

Events like these will hopefully generate interest and bring about movement. Improving access to finance is really one of those key areas that we should seek to strengthen expertise–it really is a key benefit that this technology can provide.

IBM Global Study: Telecom Industry CEO Survey

Recently, IBM released a survey of telecom industry CEOs. You can read the full report titled  “The Enterprise of the Future – Telecom Industry Edition.” Download Here (PDF, 270kb). The study reveals findings from interviews conducted with 47 CEOs from telecoms around the globe. It is a great deal of insight about the views of industry insiders on topics like managing change, pursuing effective CSR strategies, and making disruption work for them.

Glimpses of July 17th Announcement

Two more months and then we'll know what the beast looks like

Until the announcement on July 17th of the 2nd round of telecom sector liberalisation, we are like the people in this picture, only able to  guess at the parts of the elephant. We have already seen what competition in mobile means, and on that day, we will be given the road map for how Internet will advance in Fiji.

So, as we attempt to piece together what the elephant looks like, let’s take a look at what Dionisia has for us over at FijiLive:

The deregulation of international access, scheduled for July 17 this year, is phase two of the process. It will mean that any domestic reseller of telecommunication services may directly source its international bandwidth needs without going through FINTEL, as was previously the case.

Her article was very informative and helps us get a better understanding of how FINTEL is positioning itself with regard to future competition and government regulation.  By getting out ahead of government calls for liberalisation of the international gateway they hope to avoid more serious measures that government might push.

Next-generation wireless networks for mobile and broadband Internet

Emerging economies face all sorts of opportunities to leapfrog entire stages of economic development.  Mobile phone usage is leading to the demise of wired line service.  Similarly, wireless broadband service offers the same potential for disruptive impact.  Regulatory bodies must stay on top of these developments to ensure a variety of outcomes:

• investment in next-generation network infrastructure and services
  
• promoting competition in services
  
• ensuring the technology is propagated as widely as possible

For Fiji, we can pretty safely say that wireless networks will deliver broadband Internet in the future.  This is because the country lacks the population density to justify the expenditure in fiber-optic cable, the new standard in wired internet service.  As wireless technologies close the performance gap and become cheaper from wider use, they will become more viable.

With regular Internet usage estimated at less than 5% of the population, the challenge is to create wireless networks that cover as much of the population as possible, and have service plans that are within reach of the average person.

Here is a comparison of WiMAX and LTE, competing standards for 4G or next-generation networks:

So despite their differences in origin and current availability, the two siblings may grow closer with time, especially as newer iterations on the standard emerge. Wright said 85 percent of the work and technology for WiMax equipment will be reused in Motorola’s LTE equipment designs. The true battle isn’t between the competing 4G networks, but between wireless and wired broadband.

“The performance and capabilities of WiMax and LTE will only get better over time, and will represent a direct competitive threat to the existing broadband services,” Wright says. “People will make a choice, just like today when people are disconnecting their wired lines for voice.”

This should help put the competing standards into perspective.  In Fiji, the WiMAX providers are Kidanet and Unwired.  Since LTE is very closely affiliated with mobile phone operators and manufacturers, Digicel and Vodafone are in that camp.

Understanding what these standards mean for each other, as well as to wired and wireless broadband connections will be a key part of how regulators ensure sufficient competition to spur investment in the technology and guarantee service to as wide a segment of the population.  The blurring of the lines between mobile and mobile Internet is also something regulators need to be aware of.

Deploying these networks is an expensive and as yet, untested proposition.  WiMAX is available now and has been successfully tested and deployed in many locations.  You can read about a pilot project in Spain, testing capabilities of the latest generation WiMAX Rev-e standard. LTE is undergoing early field testing by Fujitsu in Japan.

Both WiMAX and LTE are IP-based networks, which poses a real test for mobile phone operators as they figure out how to handle the switching technology to best deal with voice as well as data.  That is part of the reason why LTE deployment is not expected to arrive until 2012.

In earlier posts, I discussed how sharing infrastructure in a public-private partnership arrangement might be the best way to guarantee that service is available to as wide an area as possible.  Well, news out of the UK suggests that mobile phone operators are seeking partnerships to share network infrastructure with each other, in a bid to reduce operating costs:

British broadsheet The Guardian is reporting that UK cellcos Vodafone and O2 are planning to combine their network infrastructures. Talks between the two operators are reported to be at an ‘advanced stage’ and an announcement on the tie-up is expected within the next few weeks. Additionally, it is believed that Orange, which already has a network sharing agreement with Vodafone, may ask T-Mobile and Hutchison 3G UK for permission to join the two operator’s network sharing venture, Mobile Broadband Network Ltd (MBNL). All five operators, despite the rumoured link-ups, will continue using their own brand names. The sharing agreements could see a reduction in the approximately 51,000 base stations across the UK, in turn reducing operating costs for all of the cellcos.

via UK cellcos mulling network sharing agreements: CommsUpdate : TeleGeography Research.

Regulators are now faced with an even more difficult task of ensuring successful competition policy.  Still, emerging economies are offered the potential to leapfrog yet another stage of development entirely.  It might make sense for regulators to do a market analysis to see if such an agreement between operators and government would bring about successful outcomes of lowered costs to the consumer and wide availability of service.  In my estimation, avoiding the costly duplication of service should be something that is explored furhter.   Lowered initial investment expenditure and reduced operating costs would make companies more willing to deploy wireless technology quickly and more widely.

CW gets MagicJacked

With numerous VOIP solutions out there, it’s impossible for even large publishers like PC Magazine or CNet to review and be knowledgeable of all of them.  The free-for-all atmosphere means an ever-shifting landscape of offerings.

The Magic Jack retails for $40 USD and requires a $20 USD annual service agreement

This past weekend, I received a call on my mobile phone and saw a phone number from a 312 area code (Chicago, IL) trying to reach me.

I picked up the phone call and found it was none other than a CW tipster and early supporter, calling me from Fiji.

Just like that, the Coconut Wireless had been MagicJacked!

A free phone call between a MagicJack-powered PC in Fiji and a mobile phone in the United States, shows the power that VOIP offers to the consumer.  Read the PC Magazine review here.

For over a year, late-night television in the United States have featured infomercials and advertisements for a product called MagicJack.  I never paid any attention to it till now.

The MagicJack at work

The device retails for $40USD and the cost of annual service is $20USD.  Setup and configuration is straightforward and the registration process allows you to register a US phone number to make and receive phone calls.  I am not sure how this would work for those living outside the United States.

The device connects to your PC via a USB 2.0 port.  You can plug in any phone to the device.

When disruptive technologies are put in the hands of users,  they will often surpass expectations with ingenious ways of finding applications for the technology.

MagicJack was intended as a service to offer almost free domestic calling to anyone in the US.  Since, its only requirement is a broadband connection, it is possible to use the device to make and receive calls to and from any number in North America.

If you have business or relatives in North America, it may be well worth it to you to try this device.

The philosophy of this site has always been that empowered users will seek out solutions for themselves.

Tailoring liberalization to fit the Pacific Islands

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.

Creating a policy toolkit for S. Pacific Regulators

For several weeks now, I have been parsing through websites and academic papers trying to understand the available literature on telecommunication policy.   An earlier post on O3b referenced the International Telecommunication Union meeting in Tonga.

One of the outcomes from this meeting was a direction for ‘officials to work toward establishing a shared regulator resource centre at the earliest possible date.’

From its founding, this has been exactly the goal for this blog, to be a resource for everyone in the region to better understand how ICT  and telecommunications liberalization impacts the lives of those living in the Pacific.

In true Pacific fashion, island nations have shown up late for the telecommunications liberalization party.  This is regrettable, but it presents us with the opportunity to study how liberalization has fared in other countries in the world.  In the literature on development, this is referred to as the benefit of being a latecomer.

Of course, it’s only a benefit if we learn the right lessons, make the appropriate comparisons, and take the necessary steps to avoid pitfalls faced by other nations who attempted to bring about change to their telecommunications sector.

Read about telecommunications policy and failures of liberalization in South Africa, as well as challenges faced by small economies, particularly relevant for the small island states of the Pacific.

There is an overwhelming amount of information that is available on this topic from online sources.

Click above image to view table of contents for ITU's ICT Regulation Toolkit

The plan is to have this become the first in a series of posts that will examine issues of telecommunications policy pertaining to liberalization and regulation.

To get a better understanding, it’s helpful  for us to develop a  road map to better put into perspective the many issues of concern.  For our needs, the framework of analysis is offered in Section 2.4 of the ICT Regulation Toolkit, which outlines responsibilities of a good regulatory body:

• implementating the authorization framework that provides opportunities for new companies and investors to establish ICT businesses. Simple authorization procedures tend to maximize new entry (see Module 3);
• regulating competition (including tariffs) involving the effective enforcement of fair and equitable competitive market principles, restraining the power of dominant suppliers and leveling the playing field for new entrants (see Module 2);
• interconnecting networks and facilities. Normally transparent rules are established for interconnecting all types of traditional and new communications networks and associated cost-based payments (see Module 2)
• implementing universal service/access mechanisms to ensure the widespread (and affordable) diffusion of ICT (see Module 4);
• managing the radio spectrum effectively to facilitate new entrants and new technologies, which is particularly relevant to new broadband wireless opportunities such as Wi-Fi and WiMAX (see Module 5); and
• minimizing the burden and costs of regulation and contract enforcement (see Module 7)

Future posts on policy will be oriented around these modules.  You can also expect more emphasis on academic articles that focus on small economies, since that is where the most apt comparisons to Pacific nations can be made.

Vodafone calling rates down 44%

It seems like just the other day that I was writing about Digicel’s arrival in Fiji.  Well, it’s safe to say that their impact has been immediate and significant.

Earlier reports confirm what everyone in Fiji already knows about mobile calling rates.  Digicel entered the market in October of 2008 and since that time incumbent provider Vodafone has slashed rates by 44% to hold on to market share.

Peak rates for Vodafone “on-net” calls have been dropped from 27 cents a unit to 15 cents a unit or 30 cents a minute in comparison to 54 cents previously. Off peak rates have been slashed from 18 cents a unit to 12 cents a unit or 24 cents a minute. SMS charges have been dropped by 50 per cent to 10 cents per txt compared to 20 cents earlier.

As these two companies battle it out, it should be consumers who rejoice. 

Real Competition in the mobile sector will mean continued improvements in these areas:

• improvements in call quality
• expanded coverage areas
• responsive customer support
• more frequent releases of services and features in-demand with customers

And really, the list of benefits is far too extensive to be detailed here.  The real measure of the success of Digicel’s entry into the market will be made several years down the road.

Digicel has built its reputation on monopoly-busting in small markets all over the Caribbean and the Pacific and there’s nothing to indicate that they will stray from their credo as they expand in Fiji.

Announcement of their donation of $500,000 to assist victims of the recent floods in Fiji, as well as their plans to build a green-powered mobile network in Vanuatu show Digicel’s comittment to being a genuine partner in the Pacific.

The Promise of O3b Networks

I’ve written previously about O3b Networks, a satellite start-up that promises to deliver IP backhaul services to the developing world.  I had a good fortune to speak with their CEO, Director of Asia-Pacific Sales, and Head of Ground Networks at the recent PTC conference in Honolulu.

Satellite technology, in a new configuration, promises to release the 3rd world from the shackles placed on them by domestic telecom monopolies.

They have just announced the signing of a new contract with Quark Communications in Guyana. An excerpt from their press release:

“With less than 1% penetration of broadband Internet usage in Guyana, we feel we have a moral obligation to provide all Guyanese Internet access for educational, commercial, and medical purposes,” said Brian Yong, CEO and Founder of Quark Communications. “The problem has traditionally been that it is very expensive to connect into the global communications infrastructure. With O3b, we now have access to ‘fibre like’ connectivity at an affordable price.”

Though emphasis of this blog is on Fiji and the Pacific Islands, it helps to bear in mind that a wide range of countries in the Global South face essentially the same issues when it comes to access to international telecommunications.  O3b’s presence helps ISPs in these countries to get access to high-speed backhaul facilities for a fraction of the price.  Where the only alternative is to lay expensive fiber-optic cable to establish international access, O3b offers hope.  Fiber projects come with price tags starting at $300 million, an impossibility for small nations dealing when looking at their spending priorities.

O3b is not tackling this problem with unproven technology.  They are relying on existing satellite technology (see graphic below) deployed in a very different constellation to achieve a coverage area for majority world/developing countries in entirety.  Some technical specifications:

Courtesy of O3b Networks

Additional online resources for O3b:

A Link to a short clip where you can hear a National Public Radio program feature on O3b in Africa

Diagram of O3b satellite constellation, a key difference from providers of the past (Video provided by O3b):

You can find press releases, media coverage,  and the most current company information on the O3b Networks website.