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.

We’ve come a long way, baby!

Digicel Press ReleaseDigicel Press ReleaseDigicel’s Press ReleaseDigicel Press ReleaseFor decades, Fiji was deemed too far and too small to be a viable telecommunications market.  All that changed last week with the announcement of Digicel’s entry into the mobile market in Fiji.  For a country that suffered through a bloody colonization process and instability in the short years of independence, this signals momentous change.  The high prices and poor service that have historically shackled communications in Fiji will hopefully become a thing of the past.   If we can use Digicel’s track record in other countries as an indicator, they just might be.

Fiji takes a tremendous leap toward competition and economic liberalization with the granting of a operator’s license to Digicel, a Caribbean-based operator with presence in 20+ countries with similar profile to Fiji.

Contrary to prior reports, the government auction process did not hand out two licenses for mobile operators. Digicel pays the government US$10.25 million for the right to be the only mobile operator to go up against Vodafone.

Fijilive says that Digicel has already put in place pieces of an estimated FJ$120 million cellular communications network. According to their own press release, the company also intends to make Fiji the headquarters of its regional operations, eventually employing as many as 250 full-time and an equal number of part-time employees.  You can find the press release attached to this post (Thanks to D).

With much of its infrastructure already in place, the company plans to roll out services in 2009.  Consumers can expect prices to drop sharply and competition for services to increase as Digicel puts on the pressure to become the operator of choice for all of Fiji.  Enough cannot be said about Digicel’s track record in other countries in the South Pacific.

The high cost of cell phone usage under the Vodafone monopoly will soon be a part of Fiji’s past. Vodafone and ATH’s large profits have come at the expense of high prices, zero competition, and stifled economic growth.  For modern economies, communication is by far the most important business tool. With lowered costs for communication in Fiji, the hope is that technology will become accessible to those who may have not been able to afford it before.  Costs to businesses should decrease, increasing overall productivity.

The liberalization in the telecommunications sector bring a wide range of benefit.  Where Vodafone was slow to release anything but the most basic services and features, competition from Digicel will bring to users in Fiji services that they have not seen thus far.  Expect new services in mobile internet, video streaming, and other high-end data services as Vodafone can no longer take your recharge card dollars for granted.

It was not long ago that few strands of cable were what connected Fiji to the outside world.  Satellite communications and fiber-optic cables have brought Fiji a long way since those early days (which were not too long ago).  

There are some serious questions that remain about this move toward economic liberalization and competition. 

How much of the US$10.25 million will go toward the establisment of universal accesss schemes for mobile and internet?  If you have read earlier posts on this site, then you know that universal access is something that is very important to the authors of this site.  We urge Mr. Ricketts to come forward and outline how service will be expanded to rural areas.  Widening access to technology should be a key benchmark by which this current round of liberalization should be measured. 

Additionally, what are the details and specifics of the Telecommunications Authority of Fiji, the new regulatory body being set up to oversee the industry?  More to come, so the only thing we can all do is stay tuned as the developments come in.

Mobile Licenses to be Auctioned

Deregulation moves forward with announcement of an auction to determine which companies will receive a license to compete in Fiji’s mobile market.  Vodafone has enjoyed monopoly status for 13 years, under the previously negotiated deal which gave monopoly status to ATH companies.

From FijiLive:

It is understood companies that have been shortlisted can enter the auction and details on this are being finalized by the Commerce ministry.

Read the article here.

It’s really funny.  A country that has been held back from competition for so long is pretty much in the same position as the United States.  The auctioning of mobile licenses is going on as the same time that the US Govt. is undergoing the same process to auction a portion of the broadcast spectrum being vacated by television stations.  Here’s an excerpt of an article from the San Francisco Chronicle:

The minimum bid is $4.6 billion for the C block of 700 megahertz wireless spectrum, which is being freed up as part of the federally mandated shift from analog to digital television by 2009.

Of course, things move at a different pace in Fiji. The Govt. of Fiji should also put several stipulations into the licenses.  Requiring the bidders to pay into a pool annually, which the govt. can use to develop a Wi-max network covering the country especially rural areas out of mobile coverage.  These networks have been unveiled in many parts of the western United States and have all sorts of added-benefits like helping law enforcement communicate in these remote areas.