It’s a beautiful day in the neighborhood: Unwired Fiji’s WiMAX move and news from Asia-Pac

Unwired Fiji has selected Motorola to deploy its next-generation WiMAX network in Fiji. A very positive development. Coming in front of the July 17th announcement, it’s proof that operators are willing to invest in considerable upgrades that expand network coverage and increase performance.

From Communications Direct:

Motorola announced today that it has been selected by Uniwired Fiji to design and deploy an end-to-end 8012.16e-based WiMAX network to upgrade and provide increased capacity to the operator’s existing network for expansion of network coverage and capacity.

In the Philippines, The National Telecommunications Commission (NTC) has allowed Globe Telecom to ‘make permanent its mobile internet service for post-paid subscribers’. The company offers monthly subscriptions starting at PHP149 (USD3.1), giving ten hours of mobile internet. A low-priced introductory service option is critical for expanding Internet usage in the population.

Governments are reassessing regulations toward telecommunications as they look for investment in next-generation wireless networks. In Vietnam, significant reforms are being put in place, including provisions for foreign-ownership of network infrastructure. According to a  Telegeography update:

… the country’s draft Bill of Law on Telecommunication has been put forward for discussion at the National Assembly Steering Committee. If passed, the bill will allow private companies to build network infrastructure for the first time and will open up the telecoms market to foreign investors, as part of Vietnam’s commitment to the World Trade Organisation (WTO).

In the Asia-Pacific region, there’s a great deal of activity that impacts the deployment of wireless networks and services. Again we see governments taking steps to change policies and increase investment in next-generation networks.  A nation like Vietnam opening itself up to outside investment in telecom infrastructure is a sign of how old attitudes  are making way for new pragmatism.

Untangling the SPIN about submarine cable projects

Landing a submarine cable is no small task (Source: SPIN presentation)

An Up-to-date primer on the state of submarine cable projects in the Pacific Region is titled Trans-Pacific Capacity: Possible New Price War? It includes a section that heavily references the South Pacific:

The latest construction wave began in 2006 and has been centered on the Asian and Pacific Regions. The current round of activity started with the Gondwana, Australia to New Caledonia system,Telstra’s Australia to Hawaii system and six new trans-Pacific cables. These new cables are the Trans Pacific Express, Asia American Gateway, FLAG’s Eagle, Next Generation Network, and the Unity cable projects (Source: TMC).

Out of these six projects, only one faces significant delay:

VOIP traffic increase and planning for future demand

Growing demand for traffic in South Pacific, means that infrastructure needs have to be re-examined.  You can read from a sample of previous Coconut Wireless posts on the issue here:

• update on the SPIN cable project
• upgrades to the Southern Cross Cable Network
• developments with the American Samoa-Hawaii (ASH) cable
• launch of the Gondwana cable connecting New Caledonia – Sydney

The literature on Internet affordability and accessibility in the Pacific is pretty clear on the explosive growth in IP traffic the region is set to undergo.  But behind a statement like “demand for internet access will be 192% greater in the Solomons Island” is a more complicated picture of demand for internet services in the islands.

Consider the following chart of international voice calls from countries in the region:

This graph is from a report titled “Satellite services in the Pacific” compiled by Network Strategies, a consulting firm (Download the PDF of the full report  here). It is a representation of the number of minutes used by people in the Pacific making international phone calls. Note the general upward trend, showing a growing demand for international service.

Since 2004, Fiji’s outgoing minutes have been in decline, something that can be attributed entirely to the proliferation of VOIP services like Skype.

What would this graph look like if projected out to 2009?  The general decline in minutes used over traditional land-lines would continue downward as more voice traffic in Pacific countries is diverted the Internet.

As more users become fluent with VOIP offerings, telecom operators  will face the same fate as those in other parts of the world:

Thanks to European broadband service providers treating voice as a loss leader to attract triple-play customers, local voice has become almost free in Europe, according to research conducted by Telegeography, a division of market research firm PriMetrica.

Source: GigaOM “In Europe, VOIP Grows and Grows“

Triple play refers to the provisioning of telephone service, broadband, and television over one network by a single provider.  As landlines become less profitable for telecoms in Fiji, the providers will inevitably have to move toward providing voice services in the manner described above, as a loss leader for broadband internet and TV.  Yet another reason to make sure regulatory policies ensure a competitive environment.

If this makes no sense to you yet, don’t worry as it’s causing sleepless nights for our  existing telecoms. Right now, in high-rise offices all over capitals in the Pacific, people with Accounting degrees are examining spreadsheets very closely trying to figure what these shifts in traffic mean for future profitability.

Yet, no discussion of future possibilities for retail services and offerings can proceed without assessing the underlying need for cheaper backhaul facilities. The chart below is taken from a World Bank report (Download the PDF of the full report here):

Proposed Cable projects. click image to view in Hi-res. (Source: World Bank)

The chart shows three types of proposed networks: regional, sub-regional, and point-to-point.  Point-to-point refers to connecting two countries directly.  The World Bank does not have recommendations for many projects of these types, tending to throw its support for projects which solve the connectivity issue at the regional level.  The few instances where they support sub-regional projects are for the Solomon Islands, Tonga, and Samoa to connect to the infrastructure in Fiji (Southern Cross Cable Network).

By far, the most promising project is the regional New Caledonia to French Polynesia project.  Trying to connect the two French territories to each other would present opportunities for many other Pacific Island countries to jump onto a project which could bring significant additional bandwidth capability.  But, with an estimated price tag of USD $250 million, this project will be a long time in getting past the planning stages (a big reason to hope for the success of efforts like O3B Networks).

The same World Bank report shows how countries in the region could share in the costs of deploying the NCFP cable:

NCFP costs and benefits shared by countries in the region. Click image to view in Hi-Res (Source: World Bank)

Under this scenario, all participant countries could benefit and help help shoulder the costs of the project.  To become reality, significant policy and regulatory hurdles would have to be overcome to ensure all participant countries receive access to the cable.

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.

O3b announces pricing structure for Pacific Islands

Start-up satellite broadband provider O3b Networks expects to unveil an initial pricing plan for Pacific islands next week.  Greg Wyler, CEO, plans to announce a megabit-per-second pricing structure for Pacific Island countries at a meeting of the International Telecommunication Union from Feb 17-20, in Tonga:

Mr Wyler said the company’s preliminary assessment is that an island would pay around US$600 per megabit per second of throughput, plus an initial activation fee for the ground equipment of about US$350,000, for orders placed by May 2009. (Source: Pacnews)

I had the good fortune to see Greg Wyler, CEO of O3b, speak at PTC ‘09.  He described O3b’s plan for the Pacific Islands and it sounded pretty awesome as anyone addressing the needs of the Pacific Islands, is instantly my hero.

Greg Wyler at PTC '09 in Honolulu

O3b arrives on the scene just as other satellite companies like Intelsat are raising prices in the Pacific claiming the only alternative is stopping service to the islands.

Any news from O3b is good news for the Pacific islands.  Here’s some details on the satellites and the scheduled 2010 launch:

… based in the British tax haven Jersey Channel Islands, has contracted with manufacturer Thales Alenia Space of France and Italy to build an initial eight 700-kilogram O3b satellites to be launched together in late 2010 aboard a Sea Launch Co. rocket.

Launching satellites is no small task and there have been several quite prominent failures at what O3b is attempting to accomplish.  With the way technology is becoming so widespread in the world, the timing could be right for O3b.

We can only hold our breath in anticipation of the launch of the satellites in the latter half of 2010. On behalf of everyone who recognizes that O3b’s success means real competition for internet services in Fiji, we wish them well!

Pacific Internet Use set for Explosive Growth

Pacific is in the grip of a telecommunications revolution
 
30 MAY 2008 BRISBANE (Pacnews) —– A study of Telecommunications needs in the Pacific Islands predicts that some countries will be demanding three times the international bandwidth they have access to at the moment, reports ABC TV
 
The study commissioned by Australia and carried out by a New Zealand company said the this demand would be driven mainly by increasing internet use.
 
The study said most Pacific Island countries would  have no alternative to satellite technology to meet their telecommunications needs for quite some time.
 
The consultancy company, Network Strategies Limited, said no other technology can span the vast distances involved to service what are generally sparsely distributed and relatively small populations.
 
The study makes a stab at how demand for bandwidth will grow. It predicts that by 2012, capacity demand in Solomon Islands will be 192 percent greater than now; the Cook Islands will want 150 percent more capacity; Papua New Guinea ( PNG) 90 percent  and Samoa and Vanuatu both 77 percent 
 
The study said  the two critical issues facing the region are affordability and accessibility. It said  the high costs of connecting to satellites are a major barrier to the efforts of small island countries to improve education and expand their economies.
 
It suggests that while access to submarine cable networks would  provide some relief for Fiji and Papua New Guinea, the majority of Pacific Island countries remain absolutely dependent on expensive satellites.
 
The study recommends that costs could be brought down by greater regional cooperation with island nations ceding autonomy over telecommunications to a cooperative venture.
 
It said  the benefits could be very high and the Pacific should examine how island countries in the Eastern Caribbean have set up a regional Telecommunications Authority to combine their markets and simplify regulations……PNS (ENDS)