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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.
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.
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.
Making sense of what’s going on in Fiji’s telecommunications sector is very important to understanding the new opportunities that are now presented.
Without much public debate, 13 years ago the government of Sitiveni Rabuka entered into an exclusive access agreement with ATH.
The arrangment gave monopoly status to providers in phone and internet services.
Exclusive license has meant immense profits for shareholders of ATH (which include the government’s minority stake) while chaining users to high prices and terrible service.
With assistance from World Bank officials, the interim administration has negotiated a payment to satisfy the shareholders of the existing companies.
Once this is approved, the government will approve the applications of providers who can offer services in internet, mobile, and phone services.
Already local partnerships are forming and foreign companies like Digicel are gearing up to enter the Fiji market.
Competition in this area will dramatically lower prices and offer new services.
The people of Fiji stand to gain.
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