Impact of mobile competition in the South Pacific Islands

Impact of mobile competition in the South Pacific Islands

Mobile networks are one area where we have seen the most action in terms of the rollout of new telco services in the South Pacific. As has been evident in a number of developing nations throughout the world, mobile networks are often proving to be a more effective way of establishing new communication links, rather than though the installation of traditional fixed-line services. This is especially the case in the South Pacific due to the sparsely spread populations, often scattered over several islands.

Although it is difficult to make direct comparisons between the islands due to the vast differences in economic development, political influences and size and population, there does appear to be a direct correlation between the number of mobile operators and the level of residential mobile penetration. In fact, six of the top nine islands in terms of mobile penetration, have more than one operator.

Wireless broadband services through either WiFi/WiMAX access or 3G mobile are typically only developing as niche broadband services in most developed markets, as fixed-line broadband is normally the most cost-effective and efficient alternative. However, there is often a real mainstream business case for them in developing and remote areas such as the South Pacific, in favour of fixed-line ADSL. WiFi services are now operating in a number of islands including Fiji, Cook Islands, Vanuatu, Papua New Guinea, Guam, Niue and Tonga.

Over the past couple of years, Irish-based operator, Digicel has taken a very active role in establishing itself in a number of South Pacific islands and is committed to rolling out a pan-Pacific GSM network across five markets: Samoa, Papua New Guinea, Tonga, Fiji, Kiribati and Vanuatu.

In many cases there has been a lot of resistance to entry of a new competitor by the incumbent telco of the island. This has often resulted in legal challenges by the incumbent involving the local regulatory system. For example, in late 2007 the Papua New Guinea Government reversed its early welcome to Digicel, citing changes to its telecommunications policy and the importance of government control.

Such resistance is understandable, with uncertainty and fear arising as to how a foreign competitor could impact the local economy. However, as we are seeing, new competition is not having an adversely negative impact on the incumbent, rather it is in fact making the incumbent sharper and more in tune with market demands. As well as improving the penetration of telco services and lowering prices, more competition is indeed benefiting the entire economy, including the creation of more jobs.

Since Digicel’s entry into the PNG market, the price of calls has fallen by as much as 60%. People in remote villages are now able to ring for medical help where previously they could not. Restaurants can now order directly from fisherman while they are on their boats. During the year to July 2007, the mobile subscriber base in Samoa increased by an incredible 130% to 70,000 subscribers, due to the entry of two new competitors. This is a trend that BuddeComm is finding in many developing regions including Asia, Africa, Eastern Europe and South America.

Oceania Com Sydney July 7 and 8 – for more info see: http://www.budde.com.au/Conferences/other_conferences_details/Oceania_Telecommunications_Summit.aspx

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