Papua New Guinea: Regulator shakes up telecoms

Oxford Business Group

The entry of a new player and an increasingly assertive stance on consumer rights protection by Papua New Guinea’s (PNG’s) telecommunications regulator bode well for competition in the sector. However, a continually evolving playing field and objections to new policies from telecoms operators may create considerable challenges for the regulatory body as it attempts to improve pricing and services.

On January 28 the National Information Communication Technology Authority (NICTA) ordered state-owned Telikom PNG to cease the sales of its range of ZTE handsets until the firm complied with the regulator’s approval process. Local newspaper the Post Courier reported that Charles Punaha, CEO of NICTA, had informed Telikom that certain ZTE smartphone models were yet to be approved.

This move followed attempts by NICTA in November 2012 to push Telikom toward making the country’s principal fibre-optic connection available to all internet service providers for direct sale as broadband products, a move that NICTA hopes will open up the sector. However, Telikom questioned both the request to cease sales of its ZTE handsets and the recommendations for broadband allocation.

In another attempt to improve competition in the market, NICTA published a ceiling related to retail mobile service prices in October 2012, saying it would restrict the extent to which market leader Digicel PNG can discriminate in the pricing for pre-paid mobile voice calls. As a result, the operator will be required to revise a number of its tariffs to reflect a more competitive pricing model.

PNG’s telecoms market is currently comprised of three mobile operators (Digicel PNG, BeMobile and Citifone) and one fixed-line operator (Telikom). While the market is growing, it is highly concentrated and suffers from a lack of infrastructure, particularly in rural areas. NICTA says the telecoms market has been impacted by a number of harmful anti-competitive market practices, such as price discrimination, market collusion and “predatory and excessive pricing”.

However, NITCA has received unequivocal support from the national government in its bid to improve the sector, with Jimmy Miringtoro, minister for communication and information technology, stating in August 2012 that the NITCA’s measures are in “the best interests of consumers in PNG”.

“The everyday issues of high internet charges are still embarrassing compared to other countries ... There are others issues, such as international roaming and high interconnection charges, that need to be critically looked at and appropriate decisions made to ultimately bring costs down,” Miringtoro said.

The IMF has also supported the decisions recently made by NICTA, writing in a report in February 2012 that plans to improve competition “by replacing Telikom’s monopoly with an updated regulatory framework” were positive and build on successes in the deregulation of the telecoms industry.

However, it is clear that mobile operators will need to play an integral role in the market’s evolution. In 2012 Digicel played an important part in ensuring mobile access to rural areas through the development of portable COW (cell-on-wheel) towers, which provide effective communications to the numerous mine sites around the country. As of 2012, Digicel had raised some 700 communication towers, increasing mobile network coverage of the population to about 75%.

Changes are also underway at operator BeMobile, following reports in mid-December 2012 that Vodafone Fiji would take over management of the firm. Indeed, the Post Courier reported that Vodafone Fiji and the Fiji National Provident Fund (FNPF) have decided to acquire equity in BeMobile from the PNG government. Local media has speculated that Vodafone is readying to enter a potential pricing war with market leader Digicel.

NICTA’s pro-competition moves mean Digicel “will be forced to allow open access to its tower network and elements of its backhaul infrastructure to competitors”, wrote technology magazine Memeburn. “Vodafone will be able to piggy-back on Digicelʼs tower infrastructure, increasing its network coverage from around 20% to one matching Digicelʼs.” According to Memeburn, BeMobile (and Vodafone, once they take over management) will also benefit from regulatory changes in the market, such as seeing network coverage significantly enhanced.

While the telecoms regulator is to be lauded for its efforts to improve competition in the sector, a more inclusive process and better communication with the market’s operators could create a win-win situation that equally benefits providers and consumers.

Source: Oxford Business Group