BuddeBlog

After more than three years of solid wrangling the Government of the Solomon Islands has finally decided to end the monopoly of its incumbent operator, Solomon Telecom.

The telco changed its name a few years ago to Our Telecom, most probably with the aim of building up a better public image for the organisation, but the country continued to have one of the lowest telecoms penetration in the South Pacific. The table below shows the enormous progress that has been made in the South Pacific, with only Solomon Islands and Kiribati missing out.

Table 2 – Mobile penetration in Oceania by country – 2003-2008

(Source: BuddeComm based on industry data)

Examination of the other sectors in the market reveals equally low levels of penetration for Solomon Islands. While services such as satellite and broadband are at least available in a limited way the prices are so high that hardly anybody other than business and government users can afford them.

As an example, many villages have a satellite dish for voice communications, but at a cost of $10 per minute very few people with an income of one dollar a day will be inclined to use the service.

The reason it took so long for the government to open up the market was that Solomon Telecom generated rather nice profits, which, of course, benefited the government.

The fact that even during the Parliamentary discussions it was still unclear whether the new Telecommunications Bill would be passed demonstrates the level of political power the telco had to influence the decision-making process.

But the national interest has prevailed and, as a result of this, the focus of telecoms will shift away from looking after a few shareholders to the provision of large-scale social and economic benefits for the whole country.

We have seen what competition can do in other Pacific countries, and nearly single-handedly this has been the result of the involvement of Irish mobile company Digicell. After it developed its business model in the Caribbean it moved to the Pacific and the increase in penetration in mobile there is largely due to Digicell.

Not that it captured the whole market for itself. It has certainly done very well, but it also forced the incumbents to be more competitive, and we have seen a true transformation of the telecoms market across the Pacific as a result.

While mobile has been the most noticeable result, Internet access and broadband have also seen unprecedented growth in the countries that have embraced competition. It is interesting to note that there is hardly any country in the South Pacific – even the smallest one – where an opening up of the market has not produced a significant increase in telecoms, accompanied by the economic and social benefits that this brings with it.

Paul Budde

See also:

• Solomon Islands – Telecoms Market Overview & Statistics
• 2009 South Pacific Islands – Telecoms, Mobile and Broadband
• South Pacific Islands – Regional Market Overview & Statistics
• South Pacific Islands – Analysis of Mobile Competition – 2008
• South Pacific – Outcomes Oceania Com Conference

This entry was posted on Thursday, August 27th, 2009 at 1:38 pm and is filed under From Paul's Desk. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.