Reuben Kautu, Chairman, DataCo: Interview

Interview: Reuben Kautu

To what extent could retail competition in Papua New Guinea bring down telecoms prices?

REUBEN KAUTU: More competition in retail will make a difference to the dynamics of PNG’s telecoms sector, as the market has been monopolised over the last few years. Competition will lower prices, which are prohibitive in PNG. For this reason the government has decided to separate its wholesale business from retail, bringing.

For a smaller economy, this separation is necessary to ensure non-discriminatory and cost effective supply at the wholesale level, so that retail service providers are not forced to build their own wholesale infrastructure. This reduces duplication of critical assets and associated costs, which are passed to end users. Retail Competition drives prices down to cost, of which wholesale prices are a major component, but reforms for to separate wholesale assets address high costs.

Going forward, we aim to upgrade and operate the National Transmission Network (NTN), which will connect most of the population in mainland PNG with fibre-optic cables. The operation model will be similar to that of the fuel distribution industry, with one supplier and several service stations in competition with one another. This will allow a distinction between the costs and services of stations. Inefficiency has been a stumbling block, so addressing this issue will help reduce telecoms prices by as much as 70% for end-users.

How could the sector benefit in terms of service delivery from a new wholesaler? What is the status when it comes to the transfer of assets?

KAUTU: The PNG government is driving a process of liberalisation across the whole economy, including telecommunication, but it will take between one and three years to turn this vision into reality. The process is moving slower than expected, although some assets can be transferred immediately, such as international submarine cables and other domestic cable assets. In the long run the transfer of assets will be completed in three stages, which includes the international assets, microwave and satellite. Moreover, new assets have been built at the same time. For example, the northern cities of Medang and Lae will be connected to Port Moresby via fibre optic using the existing electricity tower infrastructure and the liquefied natural gas fibre. We expect this to be completed by 2016.

We hope that with the restructuring of state-owned enterprises providing ICT services and infrastructure assets, duplications of assets can be eliminated. Both the business community and consumers are aware that IT service provision to date has been rather poor in PNG. Unbundling the business should therefore attract a great deal of investment that could spur economic growth. Information is key for social and economic development everywhere nowadays, and PNG can no longer be kept waiting indefinitely at the fringes of a cultural revolution which is sweeping the globe.

Offering better choices to consumers is what the free market is all about, but not many people in PNG can at present afford the PGK300-500 ($114-189) required for monthly use. Once those costs are reduced through the completion of the NTN, and more competition introduced at the retail level, we can expect to see a boost to the economy as well as better service delivery.

What advantages would a new Melanesian underwater fibre-optic cable offer as an alternative to the APNG2 cable that is currently in operation?

KAUTU: The APNG2 cable is in the process of ageing, already having been operated at a fraction of its original capacity for years now. That is why we have opted for the ICN2 Melanesian cable in a joint venture with the Interchange of Vanuatu for a future regional development. Indeed, PNG has the opportunity to become a regional submarine cable hub, with countries such as Indonesia and the Philippines – as well as our neighbours in the Pacific – connecting through Fiji, the US and the wider world. For areas that we are unable to reach as part of the NTN, we plan to launch the country’s first satellite, which will be called Kumul Satellite.