2009 South Pacific Islands - Telecoms, Mobile and Broadband

Penetration rates of telecom services in the South Pacific Island region are still comparatively low, with large differences between urban and rural areas where coverage is usually poor. Access to basic telecom services remains relatively expensive. Less than half of all Pacific Islanders have a phone and generally there was only one supplier for any particular fixed, mobile or Internet service. 

However, a lack of reliable fixed infrastructure combined with cheaper installation costs has enabled mobile services to begin to make significant inroads into the market, and Digicel Pacific is leading the market here, as it sets up networks across a number of islands. As well improving the penetration of telco services and lowering prices, more competition in the mobile market is in fact benefiting the entire economy, including the creation of more jobs. Mobile telephony is expected to continue outpace growth in fixed-line connections as the market moves into 2009. 

The global financial crisis is likely to have only a moderate impact on the South Pacific islands, although it is difficult to make cross-regional generalisations due to the complexity of the region. Tourism is one sector which is likely to be hit the hardest across the region. The economies of islands such as Fiji and Vanuatu are very dependent on the tourist dollar, and there is no doubt that in a severe economic downturn, more overseas travellers will be re-considering non-essential overseas travel. 

Broadband market

Several of the region’s nations are upgrading satellite links to outer islands, installing wireless broadband and upgrading fixed-line broadband capability and some are rolling out high-speed ADSL2+ broadband. WiFi services are now operating in a number of islands including Fiji, Cook Islands, Vanuatu, Papua New Guinea, Guam, Niue and Tonga. 

Broadband availability by access type – 2008

(Source: BuddeComm based on industry data)

Deregulation is opening up local markets

Despite local resistance, a move to deregulate the telco sectors of a number of islands, is paving the way for more competition and lower prices. The Fijian telco sector has been finally deregulated, after a lengthy process involving much resistance from the incumbent and many legal court battles. 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. 

Mobile competition begins to thrive

Many of the islands only have one incumbent telco, which often provides all residential telco services: voice, and Internet access, as well as mobile access. The majority of the islands do in fact have a large enough economy to sustain competition, although in most cases only one additional competitor could realistically supported. 

Already a choice of mobile operators is now available in a number of South Pacific islands: Papua New Guinea (two); Samoa (three); Tonga (two), American Samoa (two); Guam (five); North Mariana Islands (three) and Palau (two).

Since Digicel’s entry into the PNG market, the price of calls has decreased by as much as 60%. People in remote villages are now able to ring for medical help where previously they could not. This is a trend that BuddeComm is finding in many developing regions including Asia, Africa, Eastern Europe and South America. 

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, as we are seeing, 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. 

Digicel launch in Fiji – a key turning point for the South Pacific

BuddeComm views Digicel’s launch in Fiji as a key turning point in terms of stimulating competition in the Oceania region, after the operator already launched services in Samoa, Papua New Guinea, Tonga and Vanuatu. 

Digicel ended a 14-year monopoly in the mobile sector enjoyed by Vodafone Fiji. BuddeComm predict that prices could fall by as much as 50%, as has been seen in other islands. Also the flow-on effect to other parts of the Fijian economy should be significant. There is also likely to be a flow-on effect to stimulate growth on other islands. 

Data in this report is the latest available at the time of preparation and may not be for the current year.