broadband in fiji: a micromarket case studycrc.gov.mn/file/newfile/broadband_in_fiji-ptc... ·...
TRANSCRIPT
Broadband in Fiji: A Micromarket Case Study
Pacific Telecommunications Council Broadband Reports, Number 1
Elizabeth Fife, Ph.D., Editor
General Inquiries Pacific Telecommunications Council 914 Coolidge Street, Honolulu, HI 96826-3085 +1.808.941.3789 [email protected] ptc.org
Media or Press Inquiries Pacific Telecommunications Council 914 Coolidge Street, Honolulu, HI 96826-3085 +1.808.941.3789 [email protected]
Recommended Citation American Psychological Association (APA) Style, 6th Edition: Fife, E. (Ed.) (2013). Broadband in Fiji: A Micromarket Case Study (Pacific Telecommunications
Council Broadband Reports, No. 1). Honolulu, HI: Pacific Telecommunications Council. Chicago Style, 16th Edition: Fife, Elizabeth, ed. 2013. Broadband in Fiji: A Micromarket Case Study. Pacific Telecommunications
Council Broadband Reports, No. 1. Honolulu, HI: Pacific Telecommunications Council.
Broadband in Fiji: A Micromarket Case Study Pacific Telecommunications Council Broadband Reports, Number 1
© 2013 Pacific Telecommunications Council
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org iii
About the Report
Source: Fiji Ministry of Information
This study is a collaboration of the PTC Research Community and PTC participants from
industry, international organizations, and government. A goal of this effort was
engagement of the expertise within and connected to PTC to initiate a knowledge
network that would reflect a unique PTC perspective. In tackling the issues around Fiji’s
broadband development we sought to join current descriptive information with analysis
that incorporates academic rigor, practitioner’s experience and industry relevance. This
approach can be further developed going forward. In this effort we have tried to bring
forward some of the realities of Fiji’s telecom environment to help differentiate this study
and consequently have focused on the views and experiences of individuals currently
involved with Fiji’s National Broadband Plan.
A wiki discussion group has been a concurrent effort, allowing engagement between the
far-flung scholars and professionals involved in this initial effort to generate joint research
that reflects the knowledge base and interests of PTC.
In addition, this project expanded the reach of PTC to new sources of knowledge and
influence in the telecom environment of the Asia Pacific. Extension of linkages is reflected
in the numerous interviews and other input received from senior executives, highly placed
government and regulatory officials, and advisors, many of whom were somewhat familiar
with PTC, others who now are aware of PTC as a resource.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org iv
Acknowledgements
PTC Industry and Research Community Contributors
Elizabeth Fife Editor [CTM, Marshall School of Business, University of Southern California]
Milad Mohammadi Principal Contributor [Virginia Tech]
Daniel Smith Contributor [Lecturer, University of Hawaii, Hawaiian Airlines, Principal Engineer, Avionics]
Side Bar Contributors
Laura Hosman [Associate Professor Illinois Institute of Technology]
Shinya Murakami [Project Coordinator, Japan International Cooperation Agency]
Kas Kalba [President Kalba International Inc.]
Juan Orjuela [University of Southern California]
Francis Pereira [Adjunct Professor, Marshall School of Business, University of Southern
California]
Bibhya N. Sharma [Professor, University of the South Pacific]
PTC Contributors
Ewan Sutherland [Research Fellow, LINK University of Witwatersrand]
Bruce Baikie [CEO, Green Wifi]
Mothilal de Silva [CEO, Telco Vision Pvt Ltd]
Yoshiharu Fujita [Ministry of Internal Affairs and Communications, ICCP]
Tomas Lamanauskas [ICT Policy Advisor, Office of the Government CIO, Prime Minister’s
Office, Government of the Republic of Vanuatu]
John Hibbard [CEO, Hibbard Consulting]
Jim Holmes [Director, Incyte Consulting]
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org v
PTC Contributors (continued)
Robert Horton [ITU Consultant]
Christina Higa [Director, Telecom and Information Policy Group, University of Hawaii]
Nir Kshetri [Associate Professor, University of North Carolina-Greensboro]
Bob Lyon [Chairman, Fiji Development Bank]
Xinru Ma [University of Southern California]
Pacific Islands Telecommunications Association [PITA]
David Sawcer [Assistant Professor, University of Southern California]
Chaminda Senewiratne [Head of Data and Broadband Services, Vodafone Fiji]
Rashid Shafi [Sr. Exec. VP & Chief Strategy Officer, Multinet Pakistan Private Ltd.]
Minoru Sugaya [Professor, Media Policy and Economics, Keio University]
Yoshihisa Takada [Associate Professor, Institute for Media Communications Research, Keio
University]
Ian Thomson [ICT Outreach, Economic Development Division, SPC]
Chris Vonwiller [Board Member Appen Butler Hill, former President & Chairman PTC]
Kawasumi Yasuhiko [ITU-D rapporteur for rural communications development, Advisor to the
ITU Association of Japan]
PTC Broadband Report Advisory Committee
Stephan Beckert VP Strategy, TeleGeography (PTC Board of Governors)
Shishir Belbase Head, Communication & Networks, Office of Information Systems &
Technology, Asian Development Bank (Vice-Chair, PTC Special Interest
Group on Development)
Russ Kaurloto Deputy CIO, University of Southern California (PTC Board of Governors)
Rashid Shafi Sr. Executive VP & Chief Strategy Officer, Multinet Pakistan Private Ltd.
Richard Taylor Professor, The Pennsylvania State University (Chair, PTC Board of
Governors)
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org vi
Foreword
Information and knowledge have served as the
cornerstone of survival, innovation,
development, economic opportunity, and
power throughout the history of human kind.
Those with access have always had a
competitive advantage over others for
education, health, and economic growth and
those without access have lagged behind. As
we move from the agricultural to industrial to
the information era, access to information
becomes more prevalent, a basic right and
means to poverty reduction. With the rapid
technological developments of recent decades,
the means of accessing information and its
sheer volume have not only spread faster and
more broadly, but also have grown larger and
more complex. And those without access will
continue to fall behind the curve – creating an
even wider digital divide which ultimately
contributes to economic inequality and
poverty.
Access to information and the Internet has
already become a utility in most developed
countries and there is no other easier means to
make it available to the public in developing
nations than through broadband networks.
Such networks have become the foundational
infrastructure for providing access to
information and linking citizens with the world
of knowledge in education, health, safety,
agriculture, and the environment.
Broadband networks have for example
empowered citizens to act as individual
cartographers – as people become a powerful
source for information collection, they push
demand for better services from the
government, fight corruption, and motivate the
use of alternate resources – global and local -
for survival and new opportunities.
Island nations and its peoples have a greater
disadvantage when it comes to poverty
reduction and access to information due to the
isolated and dispersed nature of their
geographical location. On the other hand, the
Pacific islands are also blessed with pockets of
lands and population where the deployment of
any infrastructure, including broadband
becomes more convenient. Broadband
networks can play a larger role in such
countries by leap-frogging development,
making information access ubiquitous and a
human right, shrinking the inequality gap,
reducing poverty, and creating a safer
environment for its citizens.
Given our understanding of how broadband
can improve the daily lives of individuals in
micro-territories of the South Pacific Islands,
further study of how access can feasibly be
introduced is timely and relevant. Building a
knowledge base of understanding through
individual cases, aligned with the local culture
and policies, will enhance our overall
understanding of how to best serve the needs
of small island markets towards bridging the
knowledge divide and cultivating an
environment for equal opportunity for all.
Shishir Belbase, Co-Chair, Special Interest Group on Development, PTC
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org vii
Executive Summary
As Fiji moves forward with its National
Broadband plan, released in October 2011
various implementation paths are being
considered to support supply and demand
elements. The specifics of Fiji, including its
geography and demographics frame the
technology and market scenarios. However,
the bottom line of how this country can
assemble the will and resources to best
deliver the benefits of broadband to a
population is a globally relevant discussion.
This first edition of the PTC Annual Report
on Broadband addresses the specifics and
broader issues surrounding these dynamics.
The factors that matter in terms of how
broadband will be implemented and
introduced in a way that allows usage to
grow are well known: a conducive
environment consists of coordinated policy,
appropriate technology that is matched to
the context of a market, “readiness” broadly
defined, in government, the population, and
business and lastly--money. By examining
Fiji’s broadband endowments along with
some of the bottlenecks, we highlight how
Fiji can build on existing activities to enhance
its “enabling environment” and identify
emergent economic activities that can
improve the wellbeing of its society and
increase broadband investment.
Another contribution of this study is
demonstration of how a range of decision-
making methodologies and regression
models can be used to choose appropriate
technologies and develop investment
strategies for Fiji and in any similar market
through customization to individual
characteristics.
Needs-Driven Broadband
In approaching Fiji’s broadband development
from a sustainability standpoint we have
sought to identify how market forces can
support demand and usage. The unique
characteristics of Fiji at first glance imply that
lessons here are not easily transferable to
other markets and vice-versa. While the
specifics will differ- even among the Pacific
Islands, great variety is apparent; from the
French entities of New Caledonia and French
Polynesia, to the US entities that include
American Samoa, Palau, Micronesia, as well
as the independents, Papua New Guinea
(PNG), W. Samoa, Vanuatu, and the Solomon
Islands – their history, governments,
topography, population and economies all
are influencing factors for broadband
offerings that meet demand and evolve as
adoption increases. The differences between
these micromarkets are also prominent in
discussions of supranational organization
and infrastructure sharing (e.g. leasing
capacity for satellite services).
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org viii
Fiji is a useful case for tackling the question
of whether every citizen in a nation can
affordably be provided with broadband. As
with other markets, there are more and less
attractive customers – the most attractive
from a business standpoint in Fiji include
those living on the two major islands (87%) of
the population, and the yearly influx of
tourists who number the equivalent of
roughly two-thirds the population. The
remaining 13% of the population is located
on remote islands that are expensive and
difficult to cover. There are also areas on the
large islands that do not have service at the
present time. While the government has
enthusiasm to improve ICT availability at
affordable prices, and it has been remarked
that communications will be a key driver of
the country’s wealth, how this desire can be
actualized is the burning question that will be
analyzed through the following principal
questions:
1. What is the regional “why?” for further
deployment of broadband in Fiji?
2. How can demand and the market
environment best be cultivated?
3. Who will pay for and maintain the
infrastructure? How will commercial
viability be achieved?
4. To what extent can models from other
markets provide insight?
5. What lessons from Fiji are relevant to
other markets?
Why Fiji?
At first glance, it seems difficult to make the
business case for this remote archipelago of
less than one million customers, with a GDP
per capita of around $4K. On closer
examination however, Fiji like has broadband
attributes--markets, customers and services
that can be developed.
The second largest island nation in the
Pacific, Fiji is centrally located to be an
attractive transport and trade hub and thus a
potential communications hub for the Pacific
Islands as well. Another attribute: the
Southern Cross submarine cable already has
a terminus in Fiji that provides backhaul to
support service growth.
Fiji has been called “the quiet achiever” in the
sense that it has numerous positive
broadband attributes such as its location,
that are not immediately apparent, but have
caught the attention of international carriers
like Vodafone and Digicel, the governments
of Japan and China, and international
organizations like the World Bank and ITU.
The Pacific Telecommunications Council
(PTC) has selected Fiji as the first target for
its yearly report because this market is less
studied and yet has intrinsic interest, and
also because it holds lessons for general
understanding of broadband markets in
developing markets.
Source: Fiji Ministry of Information
The objectives of this report are to analyze
the Fiji case for broadband to identify not
only the “solution scenarios” for this one
micromarket, but to gain insight about the
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org ix
key features that will push broadband
forward in other non-obvious emerging
markets with different dynamics and
resources. Given that there are around 84
other countries that are smaller than Fiji,
there are implications from this investigation
that are applicable in many other contexts.
In order to identify the pathway for
broadband expansion in Fiji, groundwork
should be considered across several
dimensions including the society, institutions,
economy and technology choices. Basic
recommendations that are supported in the
discussion to follow include:
Societal Drivers
- Involve communities to build demand
and ensure that services and needs are
aligned (development of participatory
practices and approaches)
- ICT training at all levels of society to
support usage, innovation and buy-in
Institutional Drivers
- Strengthen independent telecom/ICT
regulators so stakeholders can be
organized and plans implemented
- Develop consultation processes with
transparency at all stages and levels
- Develop mechanisms to effectively
make use of skills and resources offered
by external organizations
Economic Drivers
- Make measurement and assessment a
priority to support accuracy and greater
certainty in planning and policy
development
- Major lead applications: sectors likely to
facilitate growth of broadband: e.g.
tourism/telecom, government,
education, health
Technology Drivers
- Pursue an evolutionary introduction of
technology and multiple broadband
technologies – build in synch with
evidence of growth in usage while
managing fragmentation that can result
from fragile demand across multiple
technologies
The drive for more comprehensive use of a
broadband network also requires increased
resources: institutional capacity to
comprehensively implement policies,
development of programs to promote
community-based training and education,
general ICT and basic computer training on a
national scale, and development of
consultation processes to further tailor the
BB Plan to Fiji’s context. In addition to
resources to guide comprehensive use, a
business-driven use-case could jump start
further investment in broadband and support
a spinoff dynamic to the far reaches of this
dispersed archipelago and its less obvious
users.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org x
Contents
About the Report ...................................................................................................................................................... iii!Acknowledgements ................................................................................................................................................. iv!
PTC Industry and Research Community Contributors ....................................................................... iv!Side Bar Contributors ....................................................................................................................................... iv!PTC Contributors ................................................................................................................................................ iv!PTC Broadband Report Advisory Committee .......................................................................................... v!
Foreword ..................................................................................................................................................................... vi!Executive Summary ................................................................................................................................................ vii!
Needs-Driven Broadband ............................................................................................................................... vii!Why Fiji? ............................................................................................................................................................... viii!
Societal Drivers ............................................................................................................................................. ix!Institutional Drivers .................................................................................................................................... ix!Economic Drivers .......................................................................................................................................... ix!Technology Drivers ...................................................................................................................................... ix!
Part 1. Introduction .................................................................................................................................................. 1!A.!National Context: Broadband Challenges ........................................................................................... 1!B.! Current Status of the BB Plan ................................................................................................................... 3!C.! Snapshot of Current Broadband Use ..................................................................................................... 4!
Advantages/Differentiators ...................................................................................................................... 6!Current BB “Endowments” ........................................................................................................................ 7!
D.!Challenges to Creating an Enabling Environment ............................................................................ 7!Fixed Constraints ........................................................................................................................................... 7!Addressable Challenges .............................................................................................................................. 8!Telecentres ....................................................................................................................................................... 8!
E.! Central Issues for Fiji’s Future Broadband Development .......................................................... 10!Part 2. Fiji’s National Broadband Plan ............................................................................................................. 11!
A.!Principles of Fiji’s BB Plan ....................................................................................................................... 12!B.! Challenges: Institutional Capacity ....................................................................................................... 13!C.!Challenge: The Need for Indicators ..................................................................................................... 14!
Part 3. Overview of Fiji’s Telecom Sector and Broadband ....................................................................... 16!A.! Fiji’s Challenges to Creating an Enabling Environment ............................................................... 16!
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org xi
B.! The State of Competition and the Major Players ........................................................................... 18!FINTEL ............................................................................................................................................................. 19!Fiji’s Backhaul ............................................................................................................................................... 20!Broadband Pricing ...................................................................................................................................... 20!Mobile Operators ....................................................................................................................................... 21!
C.!Regulatory Dynamics ................................................................................................................................ 22!D.! International Agencies: Making the Best Use of Outside “Help” ............................................ 26!E.! Organizing Stakeholders ......................................................................................................................... 26!
Part 4. The Business Case for Fiji: Cultivating Demand and Building Capacity with
Usage ............................................................................................................................................................ 28!A.!What Do Customers Want? .................................................................................................................... 29!
Role of Users and Communities in the Broadband Plan .............................................................. 29!B.! Services to Drive Business Model Development ........................................................................... 30!
Fiji as a “Hub” for the Region .................................................................................................................. 30!Public Services: Government, Health, Education (Connecting schools and
distance learning) ........................................................................................................................................ 30!Education ....................................................................................................................................................... 32!Telehealth ...................................................................................................................................................... 37!Tourism ........................................................................................................................................................... 38!Community Involvement ......................................................................................................................... 40!Enterprise Services – Corporate Conferencing, Call Center, Data Hubs ............................ 40!
Part 5. Demand Scenarios ................................................................................................................................... 41!A.!Demand Scenarios – A Quantitative Assessment ......................................................................... 41!
Demand Forecast ........................................................................................................................................ 42!B.! Technology Choices ................................................................................................................................... 44!
Implications for Fiji ..................................................................................................................................... 48!WiMAX ............................................................................................................................................................ 49!ADSL ................................................................................................................................................................ 49!Microwave ..................................................................................................................................................... 49!Satellite and Broadband over Power Line (BPL) ............................................................................ 49!Recommendations for Fiji ....................................................................................................................... 50!Microwave Cost Estimate ....................................................................................................................... 50!
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org xii
C.!Decision Tree Analysis of Investment and Demand ..................................................................... 54!Small Island Broadband Investment Decision Tree ...................................................................... 54!
Part 6. Who Will Pay for the Infrastructure? ................................................................................................ 59!A.! Infrastructure Sharing .............................................................................................................................. 59!B.!Who Will Pay for Networks? .................................................................................................................. 60!C.!Broadband Models ..................................................................................................................................... 60!
Public Private Partnerships .................................................................................................................... 60!Budget Telecom Model (BTM) ............................................................................................................... 62!Evolutionary Route to Broadband ....................................................................................................... 62!Holistic Approach - Broadband as an Element of Comprehensive National
Strategies (Korea, Singapore) ................................................................................................................ 63!Regional Cooperation ............................................................................................................................... 64!
Part 7. Broadband Attributes in Emerging Markets ................................................................................... 65!Part 8. Conclusions ................................................................................................................................................ 69!
A.!Business Models for Micro-Broadband Markets: Build from the “Local Why?” Relevance ....................................................................................................................................................... 69!
B.!How Can Demand Be Supported? ........................................................................................................ 70!C.!Who Will Pay for the Network? ............................................................................................................ 70!D.!What Are the Lessons from Fiji? ........................................................................................................... 70!
Societal ............................................................................................................................................................ 70!Institutional ................................................................................................................................................... 71!Economic ........................................................................................................................................................ 71!Technology .................................................................................................................................................... 71!
PTC Broadband Reports, Number 2 .......................................................................................................... 71!Part 9. References .................................................................................................................................................. 72!Part 10. Appendices .............................................................................................................................................. 77!
Appendix 1. PTC Expert Survey Results .................................................................................................. 77!Appendix 2. Decision Tree and Broadband in a Broader Context ................................................. 81!Appendix 3. Broadband Plan – Institutional Arrangements, Process and Targets ................ 87!Appendix 4. Telecom Service Providers .................................................................................................. 88!Appendix 6. Interview List ............................................................................................................................. 93!
About PTC ................................................................................................................................................................. 94!
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 1
Part 1. Introduction
A. National Context: Broadband Challenges
The United Nations Economic and Social
Commission for Asia and the Pacific report
on issues for connectivity in the Pacific
region (2008) predicted that by 2015, 60% of
Fiji’s households would have access to the
Internet, up from 5% in 2005. Currently,
there are merely 43,000 dial-up and
broadband subscribers combined
(TeleGeography est. Sept 30, 2011), and
demand has in fact dropped slightly in the
last 2 years.1
Why has neither demand nor supply for
broadband grown in the Fiji market? While it
is easy to point to challenges presented by
the small island developing state (SID) with a
1 TeleGeography data has been used for up to date
information on market size info, traffic flows, other
current conditions related to broadband availability
and usage in this report. In addition, World Bank, Fiji
Bureau of Statistics and FINTEL data is also used.
population under one million, low GDP, and
other seemingly non-advantageous
circumstances, broadband has been able to
achieve fairly high penetration levels in a
number of other emerging markets with far
fewer broadband endowments than Fiji
suggesting that further expansion of existing
broadband should be attainable. Fiji enjoys
the presence of world class carriers, outside
advisors and funds, and a submarine cable.
Key challenges include infrastructure costs
(backhaul) and affordability of the services.
Demand for broadband is not sufficient for
economies of scale and therefore, cost per
user is high. This is a challenge in a
developing country like Fiji, where GDP per
capita is USD $4,390. Thus, willingness to
pay for broadband by most users is lower
than the actual cost of providing services.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 2
The UN estimates willingness to pay in the
Pacific islands, using two methods. The first
is simply a measure of average revenue per
user from the various
carriers in 2008 that
results in an estimate of
USD $8.74. The second
method uses a GDP
estimate of the value of
the services provided
by telecommunications
with an estimate that
results in USD $4.86
(UN, 2011). When we
compare these numbers with the current
cost of the cheapest plan in Fiji of USD
$16.64 from Unwired Fiji, this is almost
double the average revenue per users’
estimate of the willingness to pay and four
times the estimate using GDP. In other
words, at current prices, it seems that the
willingness to pay is below the current price
of the services. Note:
this method is based on
averages and do not
include the range of
possibilities that
innovative business
models could provide
lower prices or higher
willingness or ability to
pay.
As a rough estimate, according to the PTC
experts we surveyed, the majority estimated
that Fijians would be willing to pay FJ $10-
$20 per month for broadband connection, as
shown below in Figure 1.2
Figure 1. PTC Expert estimate of willingness to pay for broadband in Fiji (per month)2
2 Individuals from the PTC constituency along with other Fiji-based experts with acknowledged experience in Fiji telecoms were invited to share their perspectives in providing responses to open-ended questions and a short structured survey. Appendix 1 shows the full results of this modified “Delphi” study
When we compare these numbers
with the current cost of the
cheapest plan in Fiji of USD $16.64 from Unwired Fiji, this is almost
double the average revenue per
users’ estimate of the willingness to
pay and four times the estimate from GDP.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 3
Nonetheless, the well-known willingness to
pay issue on the consumer side is balanced
by the need for broadband as an enabler for
socio-economic development: raising rural
incomes, increasing job creation, enhancing
productivity and competitiveness, and the
overall promotion of economic and social
development (Eun-Ju Kim, 2012). This is
where Fiji’s National Broadband Plan (BB
Plan) and the country’s vision for the future
enters the picture. The BB Plan as a
document is a useful resource for the
country which can be held up as an important
development milestone – the next stage is
customization to the Fijian context.
Although Fiji already does have broadband—
and as observers note, has a reasonably good
story to tell with the Southern Cross
Submarine cable backhaul and existing
infrastructure that essentially covers the two
main islands, broadband penetration has not
yet reached the general population and thus,
generating and executing the needed
resources is the next thorny step. It is
generally agreed that governments play a
critical role in supporting a business
environment that will allow broadband
deployment and adoption to grow – a
conducive environment to private sector
investment along with implementation of
public sector demand-driven programs like
e-government and digital literacy initiatives,
the broadband environment will be
stimulated through investment and adoption
(ITU, 2012).
This is the current ideal, and Fiji’s BB Plan
aligns with this idea and serves as the
starting point for discussion of where to go
from this point. Our analysis suggests a
targeted approach that focuses on a few
promising economic sectors could be a useful
path towards Fiji’s own specific version of a
“Small Island Information Society” in addition
to pursuing supportive activities already
underway – development of appropriate
regulatory instruments, engaging private
enterprise, developing pubic services like e-
government, and encouraging demand
through telecentres.
Our analysis suggests a targeted
approach that focuses on a few
promising economic sectors could
be a useful path towards Fiji’s own
specific version of a “Small Island
Information Society” in addition to
pursuing supportive activities
already underway – development of
appropriate regulatory instruments,
engaging private enterprise,
developing pubic services like e-
government, and encouraging
demand through telecentres.
B. Current Status of the BB Plan
Implementation of the BB Plan at the
moment can be said to be somewhat lagging.
The Prime Minister announced the BB Plan
in November 2011 and the ICT Policy and
Plan was delivered to the Ministry on May
31, 2012. Current delay is attributed to
issues internal to the government.
An industry observer had these paraphrased,
frank remarks:
Where things stand with plan? Even before
plan, broadband was available, Vodafone –
3G, and fixed operator offered DSL, and
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 4
Digicel–offering WiMAX – so pretty much
there already – but not everywhere of
course – just where operators think its
commercially viable. The plan provides a
definition of broadband as 256K - and set
some targets. As far as an enabling
environment which was supposed to have
been provided – we’re not seeing it –
incentive or help from the government – we
don’t see. Encouragement is not there. It
will take some time for targets to be
reached. So far government services online
are pretty basic, school connectivity,
telecentres, medical centers are not yet
where they need to be. We tell the
government we are not impressed that the
Telecom Authority Fiji (TAF) doesn’t have a
website… and in the Fiji Ministry, only two
people are in fact doing telecom.
The challenge of governance resulting from a
small population, and thus small pool of
individuals who can fill offices is a significant
constraint on the speed with which a national
regulatory body can address issues.
Additionally, this lack of scale is reflected by
lack of data—market analyses and essential
surveys on ICT spending and use by citizens,
households and businesses (Sutherland,
2010).
A small staff contrasts with a large goal: to
achieve broadband service availability to
95% to all urban, suburban and rural
communities by 2016 – 95% of the people of
Fiji are intended to have the ability to access
broadband services with a download
capacity of 2 Mbps or more.”
“The emphasis will be on communities of 250
or more people who would not otherwise be
served by private sector organizations in the
foreseeable future.” There are many such
communities, including many larger than 250
that do not have access although broadband
is currently commercially available in many
urban areas for ~$35/mo. (interview, Fiji
government official).
The BB Plan was announced in 2011, further
discussion and consultation occurred
recently in July 2012 at an ITU/CTO
Broadband Forum in Nadi. Fiji’s Attorney
General and Minister for Communications
remarked that broadband could serve
farmers, business people and had potential
for government services such as
telemedicine. He also reported that
spectrum issues needed to be corrected.
Additionally, a common regulatory regime
was proposed, “For small countries
distributed among such a vast area, a
common regulatory regime and a shared
commitment to security, accessibility and
quality can give us greater control over our
destiny” (Sayed-Khaiyum, Opening remarks,
2012).
C. Snapshot of Current Broadband Use
The Internet market in Fiji is small, only
14.4% of households have connections
(24,300 households). Most connections are
not broadband, with DSL representing a
small percentage of total users. Growth has
decreased in the last 2 years from an average
of 35.7% annual growth from 2007 to 2009
to 4.5% in 2011. The rapid growth that
began in 2007 was the product of
deregulation, but subsequently things have
stalled.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 5
Source: Fiji Ministry of Information
On the mobile side, while ARPU's are low,
usage trends show positive signs. There are
challenges based on international transit
costs of bandwidth, cost per MB and
backhaul transmission costs – regardless of
whether fibre or microwave is the access
technology. Demand is mostly urban-based
(75%) with younger people and those in the
work force making up the predominant base
of users (interview, Vodafone executive).
Businesses are the visible smartphone users,
and younger demographics are seen as the
key to pushing the mobile market. Showing
foresight, the government reduced duties on
smartphones substantially near the end of
2011 which has encouraged adoption.
Although household penetration of
broadband in Fiji is low (14.4%), by other
measures, particularly accounting for mobile
access, broadband access (256 kbps or
higher) as noted in the BB Plan is fairly high:
fixed broadband subscriptions are 2.77/100
population and mobile broadband is
subscribed to by 16.12/100 (135,000) as of
June 2011. This is slightly above the world
average in 2011 of 15.7 (ITU-D, 2012a). The
ITU estimated that 28% of Fijians used the
Internet in 2011 (ITU-D, 2012b) which puts
the country in 124th place of the 199
countries reported.
As in many countries, the number of mobile
phone subscriptions (814,806 total, Sept.
2012) (TeleGeography, 2012) far exceeds
the number of fixed lines (129,845 total,
15.5/100) (TAF, 2011). As many observers
noted in our investigation, this suggests that
much future broadband access will be
mobile. Most users (over 60%) in Fiji have
prepaid plans in line with most small island
states. In fact, Vodafone’s offering of prepaid
cards was the takeoff point for mobile
telephony in Fiji—by making it more
affordable. Over 90% of its customers are
prepaid, making this the dominant model.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 6
Figure 2. Fixed and Mobile Broadband Subscribers
Source: McNamara, Stephen (2012) Telecoms, Mobile and Broadband, Buddecomm.
Advantages/Differentiators
In reviewing current commentary and
documentation about Fiji’s broadband
“readiness” we have found a divergence of
views, ranging from optimism to more sober
assessments. Fiji has been described as
“advantaged and yet not moving.” In coming
to grips with the current environment taking
shape in developing Fiji’s broadband future,
we identify what is needed for broadband
use and infrastructure to evolve. In a
nutshell, Fiji, the second largest of the
Southern Pacific island states (which do not
include Australia and New Zealand) after
Papua New Guinea has broadband
endowments that have helped generate
external support and interest in developing
its communication network. The principal
challenge is assembling Fijian capacity to
pursue a broadband vision.
In a nutshell, Fiji, the second largest
of the Southern Pacific island states
(which do not include Australia and
New Zealand) after Papua New
Guinea has broadband endowments
that have helped generate external
support and interest in developing
its communication network. The
principal challenge is assembling
Fijian capacity to pursue a
broadband vision.
Fixed Broadband
Mobile
Broadband
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 7
Current BB “Endowments”
D. Challenges to Creating an Enabling Environment
Similar to many other small island developing
states Fiji faces challenges related to the
tyranny of a small market: an economy that is
somewhat vulnerable to economic shocks
and a telecom market that cannot easily
support many additional entrants, leaving
operators and regulators in search of the
most feasible options to bring affordable
access to the outlying islands.
Fixed Constraints
• Difficult geography – Fiji’s remote
location differentiates it from some other
small island broadband markets such as
those in the Caribbean that are
proximate to larger economic entities. In
addition, remoteness within the islands of
Fiji is a differentiator
Domestic Resources
• Central location in Pacific islands • Relative size
Second largest South Pacific
Island state
• English speaking population - high literacy levels
External resources
• International organizations - World Bank, ITU, JICA, AusAid and others (note: some fund sources have slowed in protest to the Fiji government, but should resume after the elections in 2014)
• International carriers - Vodafone, Digicel
• Foreign investment - China, Japan, Korea, Australia
and others
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 8
o Fiji Islands comprises an
archipelago of some 322 islands
(106 are permanently inhabited)
and 522 islets. The two major
islands, Viti Levu and Vanua Levu,
account for 87% of the
population of 890,000, and one-
third of that population live in the
capital, Suva
• Small population with low ability to pay
• Underlying need for cohesion across
government institutions to address
issues with uncoordinated policy,
operational issues stemming from
colonial past, and an absence of
standards/technical standards
Addressable Challenges
• Institutional capacity: staffing resources
of the Ministry slow the pace
• Non- transparency: most people seem to
feel that the government is not
unpopular, and Fiji is stable and yet lack
of openness hinders policy development
and community driven initiative. Fiji has
been described as a “pull society” –
information is not made available; it must
be fought for
• Regulatory bottlenecks: e.g.
interconnection rates remain high which
hinders competition
• Need for IT education and computer
literacy among population: this
contrasts with a high general literacy
level
• Need for access devices (pc’s laptops tablets)
Source: Fiji Ministry of Information
Telecentres
Telecentres are a key element of the national
broadband plan and were announced
simultaneously with the plan. Through
partnerships with the World Bank and key
industry players such as Telecom Fiji and
Vodafone which provides support with
infrastructure, several centers are being set
up.3 Fiji’s telecentres in use currently are a
relatively new and usage statistics, how they
are equipped and cost of operations are not
readily available. According to a Ministry
source, no numbers on cost are available but
they are “very sustainable” due to discounted
equipment and rates. Others have
commented that long-term sustainability is
more questionable—although they have
funding, it is not necessarily long term and
there is no revenue model for the centers.
They are funded by a six-cent levy on
incoming international calls (the foreign
caller pays this levy).
3 Fiji’s telecentres are buildings, for the most part schools that are wired with broadband and equipped with necessary communication technologies (phones, faxes computers). People in the communities visit these centers to access the Internet and gain training and familiarity with these devices.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 9
Three were in operation shortly after the BB
plan announced. The first telecentres were
launched in Oct. 2012, in schools: Suva
Sangam College, Levuka Public School and
Rakiraki Public High School. At the
telecentre on Levuka, the old capital island
residents can use computers for two 30-
minute increments in a day. Although there
are plans for another 11 centres to open by
the end of 2012, this did not happen, due to
resources. However, another telecentre has
recently opened in Viti Levu to provide free
Internet access to the surrounding
community. Many of these potential users
consist of farmers and villagers who have
never used the Internet before. An assistant
will be available to help people learn how to
use Skype, Internet browsing, and other
services (Fiji Times Online, 2013).
Although evidence of telecentre’s supporting
the growth in computer literacy, digital and
social inclusion and the general expansion of
meaningful Internet use to populations that
are lacking Internet access are mixed
(Strover, Chapman and Waters, 2004), this
can be correlated to specific
implementations, rather than the concept
itself. Positive effects have been identified
(Mok, Koon, Liu, 2002). Malcolm and Corless
(2012) in their global survey report that
public access is the cheapest way to access
the Internet -- $15 vs. $49. For the most
inaccessible and least populated areas of Fiji,
telecentres seem like a cost effective means
to initiate broadband use. Thus, making sure
the telecentres have the capacity (training,
management, facilities, etc.) so they can be
successful is key.
The government of Vanuatu is likewise
opening telecentres on a small scale as a
means to cultivate demand and test
diffusion. Four sites were selected, with one
implementation in a remote area of Vanuatu.
A third party has covered costs for this
standalone facility located on a school
property, but they have been substantial.
While so far community participation has not
been robust, student use is strong. Part of
the initiative is to provide connectivity to
schools at the same time as a way to open up
access to the surrounding communities
(interview, Vanuatu government official).
An interesting example of one of Fiji’s
telecentres is bringing together communities
in remote villages of Wailoku and
Waisasavu, in the highlands of Naitasiri, Fiji,
to access information. These communities
can now access computers, Internet, and
other ICTs that help them gather
information and discuss pertinent issues
such as land boundaries and unemployment,
and job listings for young people.
In Wailoku village, the Telecentre will be
linked to the Peoples Community Network
(PCN), a group of people living in informal
settlements, to address issues affecting
them such as land tenure and education for
their children.
The communities are also using the
Telecentre to reach out to the government.
People used to send hand written letters of
complaints and inquiries to the government
departments, but now they can email them
directly, thanks to the Telecentre.
Source: Mutuku, Teresia, (2012) WACC supported
Telecentre connects rural communities,
http://waccglobal.org/component/content/article/181
4:wacc-supported-te
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 10
E. Central Issues for Fiji’s Future
Broadband Development
The following issues will be investigated in
coming to grips with factors that Fiji needs to
address, and how to think about moving
towards its broadband future.
1. What is the regional “why?” for further
deployment of broadband in Fiji? In other
words, is there a specific compelling
service or business, e.g. transport, that
would be supported with broadband?
2. How can demand and the market
environment best be cultivated?
3. Who will pay for and maintain
infrastructure? How will commercial
viability be attained?
4. To what extent can models from other
markets provide insight?
5. What lessons from Fiji are relevant to
other markets?
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 11
Part 2. Fiji’s National Broadband Plan
In line with many other national plans that
aim to provide wider access to faster
broadband, Fiji’s plan is based on claims that
it will:
• Boost economic growth;
• Save money through easier access to and
improve the quality of government
services; and
• Provide a range of environmental, health
and social benefits.
Fiji’s BB Plan of 2011 is the latest step in a
progression from the environment of a PTT
monopoly, to corporatization in 1990 to
competition in telephone, mobile and
Internet services in 2008. In the first decade
of the 21st century Fiji moved from a
telecom market dominated by three
monopoly operators, fixed domestic
telephone, mobile and international
connectivity to one with competition in each
area. In October 2011 Fiji took another
significant step, encouraged again as in 2008
by the World Bank, to construct a national
broadband plan stating, “The availability of
high quality, affordable broadband services
in Fiji is essential to facilitate innovation,
economic growth and development, and
social and cultural inclusion.” (Ministry-of-
Comm, 2011).
The principles of the BB Plan are the
following: it is market driven, there is
community involvement and ownership,
there is universal access, this access is
affordable and that government transform
its processes and “inspire” business to serve
the public, i.e. lead applications to pull in the
private sector.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 12
A. Principles of Fiji’s BB Plan
Basic principles of the Plan are the following:
• Market driven: the provision of
Broadband will be market driven. To the
maximum extent broadband
infrastructure provision and service
delivery will be through the operation of
market forces.
• Community involvement and
ownership: Broadband should benefit all
communities in Fiji whether they are
academic, professional, urban, rural or
local communities. Broadband initiatives
will be undertaken based on community
ownership of facilities and community
responsibility for the delivery services on
a viable basis.
• Universal access: The policy reflects the
principle that broadband services shall
be accessible to all Fijians and Fijian
communities.
Access is a function
of availability,
affordability and
capacity to use. All
of these aspects will
be addressed in
programs designed
by the Government to ensure that
universal access is achieved. In particular
the Government will address broadband
access for communities that might not
otherwise be served through the
operation of market forces.
• Affordability: Broadband services at
entry levels shall be affordable for all
people in Fiji.
• Leadership: The provision of broadband
in Fiji should be private sector led
responding to market forces. However,
the Government also has a clear
leadership role in transforming its own
processes and public sector services
showcasing the opportunities available
through broadband. The Government’s
role in terms of lead applications should
inspire business and industry to develop
applications to more effectively
undertake their transactions with the
public and with each other (TAF, 2011,
7).
One feature of The Plan is the establishment
of a Broadband Policy and Programme
Committee:
The National Broadband Policy has been
adopted as an important comprehensive
government initiative. A Broadband Policy
and Programme Committee will be
established to oversee
the Policy, Plan and
program
implementation.
The Committee has the
following members:
• Permanent
Secretary of the Ministry of
Communications (Chair)
• Members representing each Ministry or
Department forming part of the Action
Plan
• A member representing the TAF
The Government’s role in terms of
lead applications should inspire business and industry to develop
applications to more effectively
undertake their transactions with
the public and with each other.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 13
• At least one member representing the
ICT industry in Fiji appointed by the
Minister for Communications
• Other members on an ex officio basis as
determined by the Committee Chair and
approved by the Minister for
Communications from time to time. The
role of the Committee is to make sure
that the National Broadband Policy and
the Action Plan are implemented and to
ensure accountability on the part of the
Ministries, Departments and Agencies
responsible for each action or program
item…
The BB plan is a good starting point,
however the translation into
tangible action is understandably a challenge, involving all actors
understanding their role in the
planning process as well as how
each player is connected through close functionality.
The Ministry of Communications shall be
responsible for preparing regular reports (at
least quarterly) on the implementation,
monitoring, review and update of the Policy
and the related Action Plan for the
Government. The Ministry shall be
responsible implementation, monitoring and
review for the Policy and related Plan
overall, working as appropriately through the
Committee. (TAF, 2011, 11)
At the time of this report, however, this
committee had not yet been assembled,
indicative of what many have pointed out:
the BB plan is a good starting point, however
the translation into tangible action is
understandably a challenge, involving all
actors understanding their role in the
planning process as well as how each player
is connected through close functionality.
B. Challenges: Institutional Capacity
Institutional capacity has stood out as a
continuing challenge to generating
momentum for the BB Plan. Capable
individuals in the Ministry often are charged
with multiple responsibilities—the bottom
line—more full time people are needed.
An industry expert noted:
The TAF has a staff of 10 which is standard
for the Pacific Islands, but in the Fiji
Ministry, only two people are in fact doing
telecom. PNG’s staff is one hundred.
Vanuatu – has done a lot and brought in a
good regulator last year. The same is true
for Samoa’s regulator which has a staff of
10.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 14
Coordinated action from multiple
departments in the government is another
requirement that is challenging. It is
acknowledged by all that having a National
Broadband Plan is an important step in
defining direction to help coalesce action,
however, the next steps are not easy. To
move forward Fiji’s broadband plan needs to
be “architected” – designed, planned and
defined so things that need to happen are in
place. In essence this comes down to a
unified vision at a number of levels which
remains a bottleneck. Below Figure 3, shows
the PTC Expert survey results which
acknowledge that institutional resources (for
TAF and the Ministries) is a necessary pre-
cursor for the National Broadband Plan to
progress. Other priorities after the need for
institutional capacity, according to the PTC
experts include network ownership
agreements and the involvement of private
enterprise. These organizational issues
appear to be a greater priority (or precursor)
to developing broadband demand.
Figure 3. PTC Expert survey shows institutional resources, network ownership agreements and
private enterprise engagement are priorities for the BB Plan’s progression
Source: PTC Expert Survey Q: To what extent do you think these items are needed so that Fiji can proceed with its National Broadband Plan? (percent agreeing to a great extent/some extent)
C. Challenge: The Need for Indicators
Fundamental to making a case for broadband
investment in “hard to serve” markets like
Fiji is economic justification: cost-benefit
analysis and demand studies to identify
pricing, the level of investment needed to
meet this demand and the projected rates of
return for investors and operators. Where
the case can be made, (e.g. in densely
populated urban areas with the potential for
paying customers) companies will likely show
up. In our interviews it was noted that
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 15
capacity to plan is supported by estimations
of expenses and costs, accessibility and
affordability, and expected penetration rates
throughout the various parts of Fiji.
We asked government officials about
quarterly reports that are supposed to be
released about the progress of the
Broadband plan. Again, lack of staff seems to
be the major reason
why such reports are
not available again
pointing to the need for
increased dedicated
hiring.
Finding the necessary
data for evaluation and
assessment is often
challenging for rural
and developing
markets, and usually
proxy measures are
used. Data on demand
does not appear to be
collected in Fiji and
thus, our analysis
necessarily makes
assumptions. Given the
importance of understanding demand for
gauging policy, technology choices and
expected outcomes, resources put towards
both collecting and disseminating this
necessary information would be well spent.
This is an addressable challenge and one
where “outsiders” could play a significant
positive role in evaluation and assessment.
Unbiased data of demand could reduce
investment uncertainty and provide a solid
basis for decision-making.
Indicators and surveys focused on
willingness to pay, openness to e-
government and online
education are greatly
needed. Any such effort
should represent a
random sample of
Fijians, specifically in
terms of location and
income. Similar to other
emerging (and
developed) markets
around the world, since
residents of larger cities
are commonly more
accessible and cheaper
to survey, data on
demand is very prone to
overestimation. Finally,
the economic benefits
of broadband adoption
in very small markets are different from
those in larger markets, and data needs to be
collected and analyzed to improve
assessments of results.
Given the importance of
understanding demand for gauging
policy, technology choices and
expected outcomes, resources put towards both collecting and
disseminating this necessary
information would be well spent.
This is an addressable challenge and one where “outsiders” could play a
significant positive role in
evaluation and assessment.
Unbiased data of demand could reduce investment uncertainty and
provide a solid basis for decision-
making.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 16
Part 3. Overview of Fiji’s Telecom Sector and Broadband
A. Fiji’s Challenges to Creating an
Enabling Environment
Having commercial carriers like Digicel and
Vodafone is undoubtedly a plus for Fiji,
however, operators in general are unlikely to
move ahead of the broadband demand curve.
Government direction is a needed catalyst—
movement in providing public services to
spur network usage will support market
involvement in more remote Fiji where
profitable markets are not obvious.
While the government as a whole is fully
behind the National Broadband Plan, it faces
limiting conditions, similar to many other
developing markets that affect the strategic
development of a broadband policy. Fiji’s
post-colonial government was inherited in
1970 and like many developing countries has
not yet fully grown a coordinated
bureaucracy organically. Having the
requisite organizational architectures
already in place to coordinate an action plan
and the simple organizational awareness and
understanding of how roles are connected
and what precisely each actor’s role is in the
planning is difficult in the absence of long-
established mechanisms. The USP and PiRRC
among others are providing educational,
training and advisory resources to support
functional needs on several levels:
coordinating planning and the intersections
of government agencies, coordinating policy,
regulatory support, and analyses of demand
and how to stimulate usage.
Nonetheless, a coordinated responsive
government system is critical for providing
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 17
direction for a multifaceted effort that rests
on an enabling environment that has
traction. One commentator described the
need for the initial plan to now have a design
that defines how things need to happen on
the ground for affordability to occur. Even if
legislation is informed by best practices and
existing models, there still can be
bottlenecks since close functionality—
understanding the specifics of how the
environment is set so principles about what
is known can be translated to Fiji in addition
to an overall understanding and knowing of
what is going to be accomplished.
A theme applicable to many other nations
executing broadband plans that’s noted by
observers is the need for transparency of
government. The ability to make use of and
accept feedback, monitoring of practices as
well as sharing information are institutional
qualities that will support progress.
The PTC experts when asked what Fiji
needed to do to become broadband-ready,
collectively stated that building up the
governments’ capacities was the most
important element to address, relative to
other issues. Essentially, increasing the
governments’ will to implement the plan is
fundamental. Cultivating economic sectors
that need broadband or will drive broadband
were the next most important element in
need of support.
Figure 4. PTC Expert Survey on Broadband Readiness: What does Fiji Need to do to be
broadband-ready?
65%$
18%$
94%$
81%$76%$
59%$
82%$
69%$
0$
10$
20$
30$
40$
50$
60$
70$
80$
90$
100$
implement$programs$to$
create$demand$
develop$a$Fiji$broadband$eco?system$
build$government$insituBonal$resources$
develop$PPPs$ involve$private$
enterprise$
idenBfy$needs$of$populaBon$
culBvate$key$economic$sectors$
lower$broadband$
prices$
Source: PTC Expert survey on Fiji, Question: To what extent are the following items Fiji needs to address to be Broadband-ready? (5-pt. Likert scale, chart represents percent agreeing/strongly agreeing)
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 18
B. The State of Competition and the Major Players
Telecom Fiji Limited (TFL), Fiji International
Telecommunications Limited (FINTEL) and
Vodafone Fiji are part of the state-backed
holding company Amalgamated Telecom
Holdings (ATH). Telecom Fiji Limited (TFL),
the local incumbent operator provides
Internet thought its subsidiary Connect
Internet Services. Connect’s fixed broadband
service covers most municipalities in Viti
Levu, Vanua Levu and Taveuni and is the
most extensive in Fiji. At the end of 2009
Connect launched a mobile broadband
service—and coverage has expanded
gradually within the Suva-Nausoi corridor,
the Nadi-Lautoka corridor and Labasa
(TeleGeography, 2012).
While competitive conditions appear
somewhat limited, the small island market in
general has characteristics that naturally
limit competition. Very small markets may
not readily sustain even a single fixed
network infrastructure operator, let alone
many, which suggest that service-based
competition may not be the only option
(Sutherland, 2011). Overall, infrastructure or
inter-modal competition for fixed broadband
is limited on small islands; with few cable
television and WiMAX networks, and often
there are no networks present at all. Service-
based competition is present on French
island territories, Iceland and Singapore, but
on very few other islands. Lack of scale is a
major factor holding back market and
regulatory developments. The model
conventionally used in developed countries,
the “ladder of investment,” does not operate
in a recognizable way on a small scale
(Sutherland 2011).
On the mobile side, while pre-paid
broadband is emerging as an option, it is still
in the very early stages of development as a
business model, constrained by the lack of
current operators and of market entrants. It
seems likely that progress will come with
offers of pre-paid mobile broadband using
cellular networks, even if the services are not
strictly the same. However, 3G and LTE as
alternatives to fixed broadband are not a
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 19
certainty, nor is a combination with WiMAX
and DSL (Sutherland 2011).
In Fiji Vodafone has moved ahead with 3G
investments. Although ARPUs remain low,
usage activity shows positive signs. There are
challenges based on international transit
bandwidth costs per MB and backhaul
transmission costs. Additionally, there are
higher costs associated with network
equipment and backhaul links for 3G.
Figure 5. Summary of Fiji’s Providers
Fixed Line
Operators Wired ISP Mobile Voice
Mobile
Wireless
Fixed
Wireless
International
Transport
Telecom Fiji Ltd (TFL) wholly owned by ATH
Connect (DSL service) prepay and postpaid
Connect (CDMA service)
Vodafone Fiji ATH, owner
Vodafone Fiji
Digicel Fiji Digicel Fiji
Unwired Fiji
Fiji International Telecommunications LTD FINTEL ATH has management rights and shares
Kidanet (FINTEL)
FINTEL
Inkk FJ (VMNO)
Inkk FJ
FINTEL
Fiji International Telecommunications
Limited (FINTEL) is the only provider of
international telephony in Fiji and
terminations to the global and domestic
network. The company is jointly owned by
the Government of Fiji (51%) and ATH
(Amalgamated Telecom Holdings Limited),
Fiji’s principal telecommunications holding
company (49%). FINTEL also owns a 100
percent share in FINTEL Internet Services
Limited, called KIDANET which manages
Internet business in the retail market.
KIDANET offers wireless broadband and
broadband satellite services for remote
regions.
FINTEL operates a robust and diverse
international networking infrastructure
which includes the Southern Cross
submarine optical fibre cable terminal and an
Intelsat Standard A Satellite Earth Station at
its Network Operations Centre in Vatuwaqa.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 20
This facility combination provides Fiji a
comparative positioning and advantage
available in other industrialized and
developed countries with direct access to
other global networks and various other
switching centers. (www.fintel.com.fj)
Fiji’s Backhaul
Fiji’s capacity has
improved greatly
through the recent
upgrading of the
Southern Cross Cable
Network (SCCN), which
has resulted in nearly
ten times its previous
capacity to support the
growth of 3G networks
and other potential
bandwidth demands.
Technically, when a
market has only one
cable it is a unique and
essential facility,
justifying regulation of
access and, if necessary
the prices charged for
access. There is
significant risk of a
vertically integrated
operator using its
access to the cable to
offer cheaper
broadband or bundling
international telephone
calls with broadband in ways that rivals
cannot. A useful precedent was set by the
French authorities, which determined the
prices for capacity on the undersea cable
from Réunion to France (Sutherland, 2011).
ISPs such as Unwired Fiji have noted
interconnection issues with the operator in
Fiji that manages the submarine cable,
Telecom Fiji (TFL) and in the end they
decided to use WiMAX. Nonetheless, large
price reductions in tariffs for bandwidth have
occurred over the past 2 years. In 2010 the
regulator took actions
and TFL lowered
interconnection prices.
Broadband Pricing
The PTC experts
estimate of Fiji’s
broadband willingness
to pay between $10 and
$20. Currently, the
least expensive
broadband plan price in
Fiji is USD $19.45
(monthly) through TFL
and USD $16.64 from
Unwired Fiji. There are
other providers of
broadband, but their
scale is small. FINTEL
provides broadband
through satellite
connections but it’s
used mainly for
business, due to cost
(more than USD $150
per month). Also,
Vodafone Fiji and
Digicel are entering the
market with the
development of their 3G networks and
through USB network access. In the mobile
space, Vodafone’s most affordable
broadband plan is 0.004 FJD/MB. They have
various bundled plans and special plans for
One PTC expert summed up the
broadband challenge in the Pacific this
way:
The small scale of the economies makes it
difficult to reduce the cost of broadband, in
addition to the expensive usage fee of the
Southern Cross submarine optical cable.
Generally people expect that once a
submarine optical cable connects to a
country, the speed of the internet
connection will be radically faster and the
cost will be much cheaper, but
unfortunately this does not happen so
easily. It is a fact that Fiji has a relatively
better connection than the other South
Pacific countries. If you define broadband
as <= 256Kbps then the connection is
reasonably available around the coastal
area of Fiji. The issue is the broadband
connection for inland rural area and
remote islands.
Shinya Murakami
Project Coordinator
Japan International Cooperation Agency (JICA)
USP-JICA ICT for Human Development and
Human Security Project
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 21
students. With Fiji’s tourist market, there is
opportunity to help fund this network
investment though international mobile
roaming charges (Sutherland, 2010).
Mobile Operators
Vodafone Fiji
95% of population is covered by Edge and 3G
HSPA services, supporting 21 Mbps
download speeds according to our industry
contact. Vodafone claims to have a business
case to support further network upgrades,
based in part on growth coming from
professionals and the youth market.
Digicel
Entering the market in 2008, Digicel at this
point has invested USD $140.4 million in a
GSM network in Fiji that covers over 96% of
the country and approximately 149,500
customers. They offer mobile money services
and pricing promotions to compete with
Vodafone Fiji’s near monopoly over Fiji’s
mobile market as shown below in Figure 6
(TeleGeography 2012).
Figure 6: Vodafone Fiji and Digicel Market Share June 2011-Sept 2012 (%)
Source: TeleGeography, 2012
Increasing competition in a small market is a
challenge relative to a large market that has
room to grow. Some of the regulator’s usual
tools like local loop unbundling, in the case of
the fixed network do not always produce
change if the limits of the market have
already been reached. Some analysis has
shown that lower prices, new services, etc.
are offered when a second operator comes
on the scene. The effect of a third operator
however, is not as clear; given the limits to
market growth there are often few carriers
interested in small island markets given the
limits of subscriber growth (Sutherland,
2010).
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 22
Unwired Fiji
ISP Unwired Fiji offers services in just 3 cities
(the Suva and Lami areas of Viti Levu) and the
most popular tourist sites. They use wireless
technology (a WiMAX microwave network)
to provide broadband. Within cities, pockets
are covered. They are still introducing
services which include low cost IP telephony
service.
Limited broadband competition is found is
Fiji where Unwired Fiji and a number of other
small providers using WiMAX and ADSL
compete in specific areas around the airport,
tourist spots, and the capitol and zones
within Viti Levu Island (Sutherland, 2010).
C. Regulatory Dynamics
Source: Fiji Ministry of Information
Fiji appears to have a relative complex
regulatory environment consisting of the
Ministry of Communication, the Commerce
Commission and the Telecommunications
Authority of Fiji (TAF). An operator we
spoke with agreed that this is challenging,
but the breakdown of duties is clear to the
operators so they are able to work with the
system. Under-resourcing is a greater
challenge.
Noted by many of our interviewees,
strengthening the independence and
capacity of the ICT regulator would support
development of the national broadband
policy. One operator told us in late 2012 that
they have experienced challenges from poor
regulation in the past, however the regulator
is now playing an active role in setting forth
new policies to support broadband policies.
Our interviews also brought forward an
important difference between the regulatory
machinery of developed and developing
markets which rely on inherited systems.
Fiji’s bureaucracy is relatively new to policy
making. Whereas the transition to
liberalization for instance took time in
Europe and the US, compared to Fiji and
many other developing markets, a transition
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 23
phase was absent and so consequently new
policies were not followed overnight with
transformative results.
Rapid liberalization also requires regulatory
policy, ICT policy, trade policy, technical
standards, among many other elements
along the food chain (interview, Salanieta
Tamanikaiwaimaro). The necessary enabling
environment was not in place initially which
makes it difficult for a national action plan to
progress. A number of issues related to
regulation are associated with a lack of
historical evolutionary activity. Critical
issues about how the regulator should
behave include the degree of transparency
needed, how to efficiently handle disputes,
and how heavy-handed they should be in
different circumstances. This thesis requires
more development than current space
allows, but is noted for discussion purposes.
Among other functions the Commerce
Commission (CommComm) handles price
issues. Competition issues for example in
setting allowable rate changes, including
forcing lower rates for customers, and
interconnection fees that carriers may
charge each other. The CommComm also
created a fund from a fee on international
calls to support universal service. This fee
has been used to support telecentres,
according to our interviews. However, the
fund has as multi-million dollar balance
whose use will mainly be directed in accord
with the national ICT policy under
construction in the Ministry of
Communications. The CommComm has an
active web site where recent decisions
across multiple industries can be accessed
(interview Aslam Hayat).
The Telecommunications Authority of Fiji
(TAF) sets technical standards including such
things as numbering and infrastructure
sharing rules. It is reported to be
understaffed. As of late 2012 it did not have
a Web presence. TAF is supposed to be
independent and neutral and for this reason
the government hired its regulator from
outside Fiji (Australia) in 2011, but he left
after only about one year.
Fiji’s difficulties with retaining overseas
expertise are illustrated thusly:
The Fijian Government has appointed Ronald
Box as the chief executive officer of the Telecommunication Authority of Fiji
Wed, 16 Mar 2011
SUVA, Fiji (FIJI TIMES) ---- The Fijian
Government has appointed Ronald Box as the
chief executive officer of the
Telecommunication Authority of Fiji…As the
regulatory authority, TAF will be responsible
for issuing licenses to telecom operators as
well as spectrum management. It will also look
after the universal service scheme, with the
ultimate objective of allowing everyone access
to telecommunication…Commenting on his
appointment, Attorney-General and
Telecommunications Minister Aiyaz Sayed-
Khaiyum said it was important to hire someone
from "outside" to maintain the independence
of the authority. Box said it was important that
TAF was independent, open and transparent.
Ronald Box stayed less than a year…
News Vacancy - TAF CEO 31 July 2012
The Telecommunications Authority of Fiji
(TAF) is seeking to recruit an experienced and
dynamic individual well versed with managing
the affairs initially of a Telecommunications
Regulatory body for the position of the Chief
Executive
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 24
The Ministry of Communications sets policy.
It is handling a draft national ICT policy of
which universal access is a part. The Cabinet
was expected to release the policy by the end
of 2012 and appoint an advisory board, but
has not yet done so. Statistics are hard to get
even for the Ministry and TAF due to
“commercial issues,” according to our
interviews. As demonstration that staff is
stretched thin: Shivnesh Roynendra Prasad
in the Ministry has a number of different
roles including Acting Director of
Communications - Department of
Communications, and the Principal
Economist - Department of Public
Enterprises, Ministry of Public Enterprises,
Communications, Civil Aviation & Tourism.
He is widely regarded as one of the most
active and motivated individuals in the
government working to push Fiji’s
broadband plans forward. However, he only
has four staff including himself, specifically
two technical staff and one engineer. While
governance of communications in Fiji faces
constraints on a day-to-day basis, another
issue is the lack of clear evidence as to the
appropriate kinds of policies in small-scale
markets, given the lack of economies of scale.
Small island regulators have fewer tools at
their disposal. The effectiveness of measures
like unbundling and bitstream access are not
clear in the developing small markets
(Sutherland, 2010). Enforcement of
cybercrime and other cybersecurity issues is
also a problem in much of the Pacific Island
region. Niue, Tokelau, Pitcairn Islands and
Micronesia for instance are all are attractive
locales for cyber-criminals given their
remoteness and lack of law enforcement
(Kshetri, 2012).
As comparative cases, Vanuatu and the
Solomon Islands both are also developing
broadband strategies, considering universal
service plans (currently Vanuatu does not
have a universal service policy).
Vanuatu’s broadband policy like Fiji’s is “top-
down” in that it is coordinated from the
Prime Minister’s office and seeks to be
comprehensive in terms of involvement of
stakeholders and developing demand by
building momentum for the easiest cases –
preferably where there is some kind of
existing activity to work from. Overall, the
government is focused on making sure that
plans are integrated between various
branches of the government, rather than
driving them and showing what ICTs are
capable of in various domains such as health
and education, and then allowing the
services to be proposed by the stakeholders
in these domains themselves. Additionally,
efforts are being made to identify
“champions” – such as school principals to
demonstrate to others the value of Internet
access. Local IT companies and others who
are already working with communities are
seen as liaisons to demonstrate the value of
ICTs to others. (Vanuatu government official,
interview)
To address backhaul, at the end of this year
Vanuatu will be getting a submarine cable
which is government supported, but the
result of a private initiative.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 25
PiRRC, Vanuatu and Solomon Islands
The Pacific ICT Regulatory Resource Centre (PiRRC) was established in 2011 with two years of
funding -- about US$2M -- from the World Bank and others. The Sri Lankan ICT think-tank
LIRNEasia is the contractor and supplied PiRRC’s director Muhammad Aslam Hayat. The
members are the small countries of the Pacific that can now get advice and share ideas on
regulatory best practices and most importantly, train indigenous regulators.
In addition to the regulatory theory-driven PIRRC, Pacific countries can look to two of their
neighbors that have transparent regulatory agencies also backed by international aid agencies.
They can observe regulation in action with successes (mainly) and some difficulties. The
regulatory bodies of Vanuatu and Solomon Islands are characterized by small-sized
organizations with small staffs and active web sites.
The Telecommunications & Radio Communications Regulatory of Vanuatu (www.trr.vu) has a
staff of 12. They cover the range of technical standards to universal access plans and funding for
a population of about 256,000 (2012). (The current levy on service providers is 0.71% of
revenue to support a modest Vt25,000,000 (US$275,00) annual UAP fund. Total budget in
2011 was almost Vt19M or about US$2.1M). The decisions and filings are posted regularly for
all to see including complex issues like interconnection rates and possible incentives to increase
broadband.
The Telecommunications Commission of the Solomon Islands (www.tcsi.org.sb) has a staff of
seven, according to its web site. It has a budget of approximately US$2.5M for a population of
about 585,000. TCSI currently has open consultations on a national broadband plan, a potential
third mobile operator and licensing conditions. It too has managed payments to the former
incumbent, dominant operator. The TCSI’s small staff may account for less posted activity
compared to Vanuatu’s.
The Samoa Office of the Regulator (www.regulator.gov.ws) has a staff of 11 for a population of
about 195,000 and was originally set up by 2005 legislation. It collects a combination of fixed
fees and 2% of gross revenue. Retail Internet is taxed at Tala 0.70/GB (0.31 US$).
These countries made the decision several years ago to create competition and were given
funding to create regulators. They are laboratories where regulatory theory can be observed in
action. Although one Pacific incumbent’s CEO called Vanuatu’s experience a “disaster” due to
the new mobile operator’s success, national coverage increased significantly at modest cost to
the ratepayers. The independent regulators have different oversight bodies but similar
structure and challenges. Smaller countries can likely afford even smaller regulators perhaps by
sharing staff or regional regulation.
Daniel Smith, University of Hawaii
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 26
D. International Agencies: Making
the Best Use of Outside “Help”
A prominent feature of Fiji’s ongoing
broadband dynamic is the presence of
outside assistance in the form of advice and
funds. As is the case in many other emerging
economies, international organizations like
the World Bank and ITU play a supporting
role in broadband investment. Fiji’s enabling
environment consists of support from
several entities including the ITU, World
Bank and PiRRC.
With international support, specifically the
Japanese government, the Pacific ICT
Regulatory Resource Centre (PiRRC) was
established in 2011. According to PiRRC’s
director, Aslam Hayat, it is a centrally shared
resource center for information on best
practices for the Pacific and supports the
crafting of policy and regulatory documents
in the service of telecom operators and
governments (interview, Hayat). An observer
referred to it as an extraordinary resource
that provides unbiased expertise.
Fiji was selected as the site for PiRRC
because of its central position in terms of
trade, travel, and as an aviation hub--to reach
most of the South Pacific transit through Fiji
is necessary. In terms of manpower and
education is said to be an obvious choice
because of factories, business
establishments and the regionally
educational resource, the University of the
South Pacific.
According to ITU consultant, a primary
writer of Fiji’s BB Plan Jim Holmes,
(interview, Jim Holmes) a broadband plan
requires a high level of commitment from
government, a few enthusiasts is not enough.
He suggests that external experts are useful
to support government “drivers.” Although
the private sector is integral, generating a
comprehensive approach to drive broadband
usage fundamentally requires the
government to lead the initiative. In addition,
national plans need to be evidence-based,
rather than aspirational.
How technical knowledge and management
skills can be transferred to reduce
dependence on external expertise is an issue
that resonates in Fiji as well as many other
developing economies. Methods to
“integrate” policymaking, regulatory and
technical assistance into the institutions
needed to provide leadership and a
comprehensive vision—an “information
society” seems to necessitate specific
measures that include training and
education. Finally, it was pointed out in
interviews that it would be a good idea to
bring in companies from outside to build
remaining infrastructure – for example,
companies from Australia and China have
the equipment for fibre, wireless and
satellite. While there may be an
understandable motivation to keep
resources in the country, having an outside
entity with experience implementing the
chosen infrastructure could bring a strong
result.
E. Organizing Stakeholders
How can ongoing coordination,
communication, information sharing be
engendered between the private sector, the
government and NGOS’s is a question not
only for Fiji, but nearly everywhere efforts
are being undertaken to connect the
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 27
unconnected. According to Bob Lyon, NGOs
and the private sector may have similar
development aims, but often work on parallel
paths. Getting them to work together is the
challenge. In addition to coordinating the
variety of stakeholders involved in Fiji’s
broadband future, how best to integrate
advisors (World Bank officials, consultants)
to avoid a disconnect between
regulators/policy people, others and ICT
experts brought in to advise is a central issue
that we identified in our research—not only
in the case of Fiji, but on the other islands as
well. Situations were described such as two
VSAT dishes installed right next to one
another; the result of two different
organizations efforts, while a building across
the street had no power or connectivity. The
same situation can result with overlapping
consultancies leading to multiple or
inconsistent solutions. Projects also are
repeated on occasion. (Jim Holmes,
comment)
In general it was noted that equipment costs
are high in the Pacific Islands, along with
extraordinarily high-energy costs. In fact fuel
costs were noted as one of the largest
operational costs. Interconnection costs are
also high. These high initial costs imply the
need to line up and organize multiple
stakeholders. The cost of energy and access
to reliable power is a key issue in Vanuatu as
well as Fiji—the government in Vanuatu has
tried to “follow” the extension of electricity
to help avoid standalone efforts that will
then face the complications of power needs.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 28
Part 4. The Business Case for Fiji: Cultivating Demand and Building Capacity with Usage
Source: Fiji Ministry of Information
To build broadband use both our interviews
with government officials, NGO’s and the
private sector all suggest several use cases
that could be fostered: Fiji as a regional hub,
(and data hub, generator of local content,
manufacturing, tele-health, tourism, e-
government and education to further
diffusion through schools as the anchor
tenants along with community centers as
initial evolutionary mechanisms for building
demand among the population). Jim Holmes
remarked that broadband demand does not
drive itself—it is caused, it is an outcome
(Holmes, 2011).
Observers generally stated that Fiji would
benefit tremendously from further
broadband access and services. Specifically,
the transportation within Fiji can be time-
consuming—the roads in places are not good
and driving to the capital can take several
hours. E-government services and mobile
banking are two services that would help
alleviate some daily inconvenience on the
part of everyday Fijians. Development of the
tourist industry from the community level
could contribute to greater prominence of
Fiji’s cultural heritage.
As noted by nearly all we spoke to,
developing broadband use as part of a
national plan, rather than for its own sake
requires design and planning from the
ground up. Our interviews identified areas
where demand may as yet be
underestimated. The National Broadband
Plan notes an intention to provide services
like telehealth and education to inhabitants
in the most secluded areas. Public services
that are difficult and/or expensive to provide
seem straightforward options to support
broadband investment. Although vulnerable
to global economic downturns, tourism is a
current source of broadband demand that
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 29
may ripe for more comprehensive growth
through development beyond the large-scale
resorts. As one of the more important
sectors in the Fijian economy, hotels, tourists
and other elements of this industry need
communications and importantly it can and
does pay for access. There is some
uncertainty in building infrastructure based
on tourists, but development of services that
support this industry has potential according
to several comprehensive studies carried out
by USP researchers (Doormen, 2004).
Our research suggests that agriculture has a
less viable business case – given the small
distances that farmers need to travel to bring
products to market, relative to a place like
India where distances can be significant. As it
takes about 2 hours to travel from one end of
the island to another, information
asymmetries are less a problem than in other
places. Broadband can facilitate other
aspects of this industry however, such as
marketing and information.
It should be kept in mind—some use cases
that can be envisioned such as tourism, data
centers, and education may not actually
require comprehensive solutions, but rather
localized broadband is sufficient (Downhiller
interview). A point often made was that
growth in usage would advance the
motivation for more substantial solutions.
The idea of a step-by-step approach is seen
by many as an efficient way to proceed,
demonstrating that once broadband has
been made available there is demand. John
Turnbull of O3b suggested that starting
small in places where the demand is not yet
defined made sense; broadband is
introduced in a lower cost manner to see
how it increases and then pursuit of more
substantial investment can then be
supported.
A. What Do Customers Want?
The growth of a few mobile services in Fiji
has been steady: Vodafone has a mobile
banking trial underway that is currently used
by some. Although it is SMS-based and thus
does not require broadband, it is a possible
pathway to drive other entrepreneurial
activity and services. Fiji also has a relatively
large emigration rate, 62.2% of the tertiary
educated population, 2010, and $128 million
in remittances (est. 2010), according to
World Bank figures (World Bank, 2011).
Source: Flikr
www.flickr.com/photos/smemon/5684115572/
(under Creative Commons license)
Facebook is another popular service, (noted
in our interviews that this service fits the
norms of Fiji’s village-based cultural
practices as well as being used by the farming
industry). Mid-2012 estimates of Face book
users were around 165,000, representing
about 18% of the population and a user base
that has grown over 35% year to year
(McNamara, 2012).
Role of Users and Communities in the
Broadband Plan
The BB Plan can be considered a “top-down”
initiative—an approach that could be
successful, but this does require execution
capabilities—sound design, wide consultation
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 30
on all aspects of the initiative and monitoring
of practices. Setting the conditions that will
do these things so that a holistic approach is
possible needs to be broached - perhaps
beginning with small steps forward. Studies
so far suggest that local community
involvement plays an important role in the
effective take-up of broadband services
(Latté man, C. et al, 2006). Telecentre
development is one means to reach the
population if implementation is managed
effectively.
B. Services to Drive Business Model Development
Source: Fiji Ministry of Information
Fiji as a “Hub” for the Region
Building on the various broadband
“endowments” of Fiji: central geographic
location in the Pacific Islands in terms of
trade, travel/aviation, manpower and
education of population in terms of setting
up a business establishment, Fiji is an
optimum location for wider business around
the Pacific. Ron Box commented that Fiji
seeks to be a benchmark for the region and
developing business around remote
conference services and offshore data
storage centers are more fitting with the
vision of Fiji as a hub. Considering Fiji is a
transport hub, support of this existing
activity through ICT investment is a viable
option for support (interview, Ron Box). The
Prime Minister has stated that Fiji is
developing its ports so that they can
transport cargo throughout the Pacific
(Foreign Direct Investment, 2012).
Also noted by Box is the fact that although
tourism seems the most apparent industry to
emphasize as a driver, in fact telecom is the
economy’s engine that can drive the growth
of other important services like tourism. A
focus on telecom and the tourist industry
would be mutually reinforcing.
Public Services: Government, Health,
Education (Connecting schools and distance
learning)
The PTC Expert survey indicates strong
belief that developing broadband through
public services will support the growth of
broadband demand in Fiji. On the other hand,
the development of local Pacific Island
content was not seen as a driver.
Entertainment-related content was viewed
as the least promising area for building
demand in Fiji (a negligible 12% of the
experts saw this as an area with potential).
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 31
Figure 7. PTC Expert Survey of Broadband Services for Fiji: To what extent are these areas
promising targets for building BB demand in Fiji?
Source: PTC Expert survey on Fiji, Question: To what extent are these areas promising targets for building
BB demand in Fiji? (5-pt. Likert scale, chart represents percent agreeing to a great extent/to some extent)
Healthcare, education and tourism are
clearly seen as the most promising sectors
for building demand in Fiji, both by the PTC
experts as well as observers we spoke with.
These views also fit the conventional wisdom
of building broadband to support use of
public services that will encourage user
adoption along with improving living
standards and productivity enhancement.
Specifically, tele-health has long been seen as
a means to help governments, particularly in
developing countries where “transactions
costs are high because of logistical problems
(Sein and Harindranath, 2004), to extend
universal healthcare services to remote
areas. For developing countries telehealth is
often viewed as an economically viable
means to increase the quality of medical
services. Similarly, tele-education provides
governments with the means to increase the
level of education and to extend the learning
experience to the homes. Another public
service that the government could provide is
early warning alerts for natural disasters.
Our research, confirmed by the PTC expert
survey (53% agreement to a great extent, the
highest ranking preference among the
possible services described in the survey)
identifies education as one of the drivers and
primary benefits of extending broadband in
Fiji.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 32
Source: Fiji Ministry of Information
Education
USP offers a number of ICT-related courses,
particularly in the computing and
information science faculty, including formal
degrees and non-credit courses through the
Community and Continuing Education
Programme, using university computer
laboratories and distance learning.
Additionally, it is offering professional
certification in Red Hat Linux, CompTIA A+,
and Cisco Certified Network Associate
(CCNA). Further, ICT elements are being
incorporated into most subject areas,
including science and engineering,
economics, tourism, governance, creative
media and statistics.
From our interviews, it seems that efforts are
being made to support online curriculums
and providing access devices, but initiatives
are in early phases. It is not completely clear
where funds for educational initiatives will
come from although tax benefits are offered
to local corporations for supporting these
activities. Also, there are no taxes applied to
imports relating to technology and access
devices that support public initiatives
(Vodafone, CS). Private enterprise is involved
in educational outreach. For instance,
Vodafone supports m-education, m-health,
and cloud services for government and public
service initiatives. M-paisa and mobile
banking are a particular focus and can
support the growth of remittances which has
become an important source of income in Fiji
and other Pacific Island nations including
Tonga and Samoa which receive over 25% of
their GDP in this form.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 33
University of the South Pacific: Distance education as a driver of broadband demand in the Pacific
ICT plays an indispensable role in today’s education sector. Most learning and teaching tools
deployed by educational institutions are invariably ICT driven. It is technology that, inter alia,
allows us to examine, analyze, facilitate and reform how students learn, how teachers teach and
how instructors facilitate learning. Telecommunication technologies have in the recent past
influenced learning and teaching processes to a great extent. One such technology is
broadband. Students and educators both benefit through broadband services by becoming
more curious, creative and innovative. Of course, learning then becomes more accessible and it
attracts a wider community of learners. Learning now easily happens outside of classrooms and
learning institutions. The education sector is riding high on tools such as eLearning and
mLearning due to the availability of broadband.
For Fiji, broadband service allows education to be available in rural communities where
educators are at times difficult to find. A number of rural schools in Fiji depend totally on the
broadband services to offer their programmes successfully and without face-to-face contact of
teachers. Mobile apps such as the edutainment modules are currently been designed and
developed to provide better service to the people of Fiji. Devices that use broadband services
are on the rise.
For The University of the South Pacific (USP) its membership stretches over 12 Pacific Island
countries -Cook Islands, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Samoa, Solomon Islands,
Tokelau, Tonga, Tuvalu and Vanuatu, and in an area of 33 million square kilometers. Most of
these countries have limited or very expensive broadband services. Telecommunication
problems are not only faced by locals and businesses, but also by USP in its operations and its
ability to offer reasonable priced services and products to its students. Definitely, a more
enhanced, robust and effective broadband service would allow for many forms communications
to take place from an educational perspective.
SNAPSHOT #4 Uses & Impacts of Broadband in Higher Education
Uses Impacts • Research by students &
educators • Use in educational
administration • Planning & administrative tasks • Online learning • Mobile learning
• Changes in the institutional roles of universities
• Creation of competitive online universities
Source: US Chamber of Commerce: Broadband and Education
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 34
The kinds of educational technologies that can be provided through enhanced broadband
services include video conferencing tools, which allow students to be using for example, Skype
from home to connect to other students and their teachers to facilitate more interactive
discussion. Also eLearning and mLearning services allow learning to happen from anywhere
anytime. Using interactive classrooms, regional students can share their work, showcase their
results, carry out group work and interact with students based in other campuses. The above
sourced table reflects use and impacts of broadband in the educational sector.
The University of the South Pacific has an
effective structure to be able to support
enhancements in technology advancements. In
the new Japan Pacific ICT Center there are two
state-of-the-art video conference facilities and
USPNet services which is a satellite network
connecting the 12 member countries of USP. The
university is connected to the AARNET
(Australia's Academic and Research Network)
which gives the university huge bandwidth to use
for research and development in the areas of
education and technology. The university also has well-established and well supported
eLearning and mLearning teams that work to progress and realize its online presence. USP uses
the open source tool MOODLE for its delivery of courses. USP also has its own SMS Center
which is connected to the two major mobile service providers in Fiji and this allows the
University to be able to communicate with its students and staff. The SMS service is used for
example to provide students useful information in a timely manner. Students can also use the
service to seek information about their gradebooks and exams. The service has also been
extended to include edutainment.
All in all, learning takes place in everyday life and in terms of the economic development
opportunities that can arise from enhanced broadband services are numerous. Referring again
to rural areas where a mother can learn how to take care of her baby properly, a farmer can
better understand climate effects and the best times to grow which kinds of crops in which kind
of soils. Fisherman being able to access better access weather information before going out to
the open seas. Working class and matured students being able to get a degree through
eLearning and mLearning services. The Pacific region has a long way to go, not only to make
broadband readily available to its people but to design and develop features, modules and
applications which use broadband to educate its people and improve their livelihood.
Dr. Bibhya N. Sharma
Associate Professor of Mathematics | Associate Dean - Learning and Teaching Faculty of Science, Technology and Environment
The University of the South Pacific http://www.staff.usp.ac.fj/~sharma_b/
Source: Fiji Ministry of Information
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 35
Technology and Connectivity in Fiji’s Primary and Secondary Schools
The Vodafone Foundation and the Duke of Edinburgh’s Award
In an effort to promote technology uptake in primary and secondary schools across Fiji, and
simultaneously build career skills among both teachers and students, the Vodaphone ATH Fiji
Foundation is promoting, supporting, and enabling schools across the country to participate in
the Duke of Edinburgh’s Award Programme.
At present, there are 100 schools in Fiji participating in this program, which promotes civic
values such as social service, team building, local entrepreneurship and professional skill-
development. Thirty-six additional schools have been approved for participation in the program
starting in 2013. There are 970 primary and 178 secondary schools in Fiji. At present, 75 of the
178 secondary schools have Internet connectivity. The Ministry of Education aims to connect
25 more schools in December 2012 and has a target of providing connectivity to all schools
across the country by the end of 2013. Perhaps the greatest challenge facing this endeavor will
be providing both computer technology and Internet connectivity to the schools currently
without electricity.
With assistance from adult Leaders (these are teachers who receive training from the Duke of
Edinburgh’s (DofE’s) London-based staff during school holidays), student-participants in the
DofE program select and set objectives in each of the following areas: volunteering/community
service, physical activity, practical and social skills-building, and expedition/travel. One example
of such a project carried out in Fiji was the planting of new mangrove trees to attempt to
ameliorate an ecologically fragile situation.
Participants are required to submit information quarterly on the projects they’ve undertaken
and the progress made toward their enumerated goals. The submission of these quarterly
updates from Fiji takes place online, which necessitates access to technology and Internet
connectivity for schools and participants.
In locations where students’ skills-development in information and communications technology
(ICT) cannot be taken for granted, such as in Fiji, the DofE program helps foster incentivization
for developing these skills.
Students are not required to participate in the DofE program at their school, but on average,
approximately 30 per school opt in to the program. The program itself is designed to be self-
sustaining, once up and running, as activities that will help fund-raise the modest sums required
to run the program can be integrated in to the proposed professionalization efforts and
undertakings.
In additional ICT-in-the-schools efforts, Fiji’s Ministry of Education is currently developing
curriculum for using computers in the curricular subjects. Grades 3-through-7 have computer
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 36
instruction as a required course, and the Ministry of Education is working to provide the
necessary hardware to all the schools. In terms of Internet connectivity, the Ministry is
currently relying on the Internet Service Providers, like Vodaphone, to provide connectivity to
the schools. Presently, there is Internet connectivity available in all major towns across Fiji, so
students in need of an Internet connection can make the journey to town if this is not too
difficult for them. However, the Ministry is still addressing the challenge of rural, isolated, or
Island schools that might not have easy access to Internet connectivity—or, even more
importantly, to electricity, as mentioned above.
For their part, the Vodafone Foundation is also providing both programs and ongoing capacity-
skills building to their partners, which includes the schools. They have developed an m-health
program for the Fijian islands, which, in partnership with the Ministry of Education, is being
taught in the schools (in addition to reaching 40,000 people per day through SMS messages with
health-related tips).
Islanders are facing a ramping up in the incidence of non-communicable diseases, such as
diabetes, high blood pressure, and liver ailments, many of which can be attributed to the
increase in the amount of processed foods rather recently introduced into the Islanders’ diets.
The aim for this particular project is to target the young, not only so that they will convey what
they learn in this program to their parents and get a jump-start in life on understanding that
what they eat and drink contributes to their overall health, but also to train these students to
utilize computers and the Internet, and thereby develop their ICT skills, as part and parcel of the
program, given its digitized and online content.
Dr. Laura Hosman
Illinois Institute of Technology
Broadband and University of the South Pacific (USP)
The USP-JICA (Japan International Cooperation Agency) ICT Project will implement a
broadband connection via Ku-band Satellite to the rural and remote islands where there is no
chance for access via the submarine optical cable.
The broadband connection will mainly be used for
the provision of tertiary education and community
services. A launching ceremony recently occurred
at Savai’i Island in Samoa attended by the Prime
Minister and Education Minister of Samoa (1st Nov
2012).
In Fiji, the project has already setup a Ku-band
connection on Vanua Balavu Island in the Lau
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 37
Group. USP is planning to set it up at Sigatoka, Rotuma, Rakiraki and Taveuni in the near future.
USP-JICA ICT Project has introduced broadband connections (shared transponder equivalent
5Mbps downlink and 512Kbps uplink) to a total of 10 USP learning Centres located in the
remote islands of the South Pacific Region (Fiji, Vanuatu, Tonga, Solomon Islands and Samoa)
where there is no commercial broadband service readily available. The learning centre is open
to the public and some centres provide their broadband connection to nearby public schools
and dispensaries by Wi-Fi. The satellite transponder rental fee is covered by USP and the JICA
which donated the satellite equipment.
Shinya Murakami
Project Coordinator Japan International Cooperation Agency (JICA)
USP-JICA ICT for Human Development and Human Security Project
Telehealth
Demand for health services exists as Fiji has
few hospitals and much of the population is
serviced through small health care centers
that need connectivity (interview, Aslam
Hayat). Given Fiji’s large rural population
which includes more than 40% of the total
residents who are scattered over 110
different islands, delivering health care to
every community is extremely costly. The
history of primary health care goes back in
the late 1970s, after Fiji signed the 1978
Declaration of Alma-Ata of “health for all” by
the year 2000. Since then Primary Health
programs have faltered across much of Fiji,
due to a shortage of health workers and
funds (World Health Organization, 2008).
There is a clear shortage in number of
doctors per population (Fiji Islands Health
System Review, 2011). The ratio of doctors
to 1,000 population was less than 0.5 in 2008
which is considerably low compared to
developed countries (for the US it is 3 per
1000). This ratio is further depreciated in
rural areas, leaving many areas with no
doctor at all. The Fiji government finances
the bulk of health care expenditure (61% in
2010), with 30% coming from private
sources and 9% from external sources
(Negin, et.al. 2012). Development assistance
for the health sector has grown from FJ$6.9
million in 2007 to FJ$22.1 million in 2010,
and as a share of total health expenditure,
from 3.4% in 2007 to 8.8% in 2010. The
Australian government is the primary
funding source, providing 60% of total
external funds. Relative to some of the other
Pacific Islands (Tonga’s dependence is four
times that of Fiji), Fiji is less dependent on
external donors, yet 9% can be considered a
significant input. The clear implication
however, is that if health care costs could be
lowered, (and levels of service and access
improved this would be of benefit to the
country as a whole).
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 38
Figure 8. Doctors per 1,000 Population in the Pacific Islands
Source: The Fiji Islands Health System Review, Asia Pacific Observatory on Health Systems and Policies,
2011 1:1.
Thus, telehealth could be a means of
delivering health services by healthcare
workers outside of Fiji to supplement the
shortage of medical personnel in country.
Depending on the level of services offered,
bringing telehealth to rural Fijians would
require high speed internet connection
(Moffatt and Eley, 2011). Providing
healthcare: prevention, diagnosis and
treatment, to remote areas has been a
continuing concern in Fiji, so this is a need
that broadband could potentially address.
There are examples of success with
healthcare information accessible via
broadband and mobile phones in other
markets like Africa. Telemedicine currently
implemented in Hawaii has reduced the
number of people going to emergency rooms
for routine off-hours ailments (Fried, 2009).
Tourism
Source: Fiji Ministry of Information
Tourism could be a vehicle for social and
economic development in Fiji as well as many
other Pacific Islands. Thus integration with
the global economy is a priority. Fiji hosted
674,913 tourists in 2011 a rise of 6.8% from
2010 (Mooney, 2012). Although the major
resorts in Fiji already provide sufficient
broadband to visitors – services for the
mainstream resort industry are met, a
holistic model of tourism development that
provides benefits more widely-- “eco-
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 39
tourism,” or “community-based tourism” has
been comprehensively studied as a way to
stimulate entrepreneurship and economic
integration with the mainstream tourist
industry, e.g. day trips to caves, organic salt
production (Doorne, 2004). Support for
smaller tourism establishments as
alternatives to the large-scale resorts along
with auxiliary services has also been studied
as a means to provide a wider breadth of
commercial activity in Fiji that would be
supported with broadband access. Critics of
the mass tourism industry in Fiji suggest that
the large luxury resorts in Fiji are foreign-
owned and thus profits don’t make their way
down to the local economy and although
they provide local employment, the bulk of
the jobs provided are menial, relative to the
positions held by the expatriate workers. As
a result, despite a growth in tourism, poverty
has increased (although the decline in
agriculture and other factors are also a
factor). Nonetheless, studies find that large
and small scale tourism both make positive
contributions to job and revenue creation
and community development, but there is
much potential from small-scale forms of
tourism to have an impact on underlying
economic conditions (Scheyvens & Russell,
2012).
However, studies conducted by researchers
at USP conclude that a more robust
broadband infrastructure has potential to
benefit the local community and industry as a
whole: small tourism enterprises could be
facilitated, access to hotel industry workers
could also increase efficiencies. It was
generally concluded that e-commerce and
better infrastructure would benefit these
small tourist enterprises, thus supporting
“bottom-up” development, i.e. encouraging
growth and the spread of economic benefits
more widely while preserving the cultural,
social and environmental integrity of
development (UNDP, 2001). The idea of
tourism for development –to function as a
vehicle for broader social and economic
development, involves communities and
participatory approaches. A challenge to
empowerment of communities is the
hierarchy of existing government and other
organizations. Theoretically in a small market
such institutional barriers would seem easier
to address. However, the human capacity
issues in Fiji’s government work against the
need for stable institutional structures. As an
example of how participatory development
can occur: workshops for developing the
USP’s tourism model involved activities with
a group of local women from the Lomawai
village who has established operations to
make salt for ceremonial purposes. Through
the project, development of their activities
for tourist consumption moved forward and
funding for this local entrepreneurial activity
was sought (Doorne, 2004).4
General issues include:
• Lack of Internet and computer literacy,
thus requiring dependence on external
technical expertise
• Lack of infrastructure
4 Hudson, (2008) reports on an isolated indigenous
community of Bario in the hinterlands of Sarawak
(Malaysian Borneo) that used its telecentre to create a
website on its ecotourism activities and local lodges,
and to book accommodations and provide responses to
tourist queries. Several professionals who left the
village to pursue education and careers have returned,
knowing that they can now work from Bario while
contributing their skills to its development.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 40
• Transparency of processes and stable
institutional environment
• Cost
Community Involvement
Initial and potential successes in tourism
(Doorne, 2004) and telehealth (2011)
demonstrate how local participation can lead
to services developing that meet needs
appropriately. Doorne’s study on building the
tourist industry through a community-based
participatory process details an “inside-
outside” approach to build services that
involve community groups and local
managers.
Enterprise Services – Corporate
Conferencing, Call Center, Data Hubs
Several commentators and individuals we
interviewed believe that Fiji has attributes
that can allow enterprise services to be
exploited: the low cost of labor, relatively
high percentage of college graduates,
English-speaking population, good time zone,
Fiji’s geographic location as a “hub” and the
fact that there is plenty of reliable capacity
given the submarine cable. Fiji does currently
have small-scale call centers, with limited
personnel, and provides this service to
companies like the Australian telecom
company, OCIS.
An interesting business possibility noted by
some was the use of broadband to create
back-office enterprises for the developed
world (David, McMaster & Novak, 2002). The
advantages listed above would support such
development, however the fact that
computer literacy is low and some fears of
political instability make the idea of an IT
service sector less likely. In addition, the
standard factors that determine the
presence of investors in IT services include
transparency, consistent commercial laws,
sound macroeconomic management of the
economy, protection of property rights and
enforcement of contracts, and finally, overall
political and economic stability (ibid, 2002).
The fact that the Fiji government has been
known to monitor Internet activities and
control access to websites hinders external
perception that it is an open environment
(Malcolm, 2012). To build on advantages and
promote Fiji as a suitable place for IT
investment, observers recommend that more
resources be allocated for ICT training,
create joint ventures with multinationals,
streamlining of business processes (reducing
the time lag for various approvals), and lastly
ensuring broadband availability (David,
McMaster & Novak, 2002). Fiji’s government
has been making efforts to limit bureaucracy
and focus on greater transparency according
to the Prime Minister (FDI, 2012). The
overall sense from our interviews and expert
commentators however, is that the
enterprise service market is in very early
stages, and does not yet have momentum to
drive broadband expansion. A few of the PTC
experts felt that off shore industries such as
data centers and corporate conferencing
were promising targets for building demand,
but the majority favored public services,
tourism and the idea of Fiji as a regional
“hub.”
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 41
Part 5. Demand Scenarios
The costs and benefits of possible scenarios are analyzed to provide a projection of a future
broadband market in Fiji based on historical data, using a regression model. Using the projected
market to estimate the cost and benefits of the different scenarios, possibilities are evaluated. The
approaches here are meant to be illustrative of techniques that would encourage national
discussion and help set priorities. In practice, much more data is required.
A. Demand Scenarios – A
Quantitative Assessment
Estimating demand using data provided by
FINTEL, World Bank, and the Fiji Statistics
Bureau through economic modeling has been
carried out to analyze the demand and
sustainability of broadband implementation
in Fiji and suggest analytic exercises that TAF
might pursue using the data that they
maintain if such modeling is not being
conducted presently.
Elements of the model include:
A. Number of Internet users in Fiji
categorized by their connection type (e.g.
broadband, mobile, etc.) for the past 10
years
B. Level of access to communication and
information technology (e.g. pc,
smartphone access)
C. Data related to current capacity of
broadband connections and prices
D. Real (inflation is accounted for) gross
domestic product data
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 42
Demand Forecast
We can extrapolate broadband usage in the
future for Fiji and find the quantitative effect
of influential factors. Having a realistic
forecast is essential. A high forecast will lead
to an unrealistic projection of profits and a
low forecast will lead to lost market.
There is strong evidence (Jovanovic and
Lach, 1989) of four distinct phases in the
adoption of technology--this includes
broadband usage. These four phases are
introduction, growth, maturity and decline.
Broadband in Fiji has grown since 2000 as
seen below in Table 9. Although there has
been a drop between 2006 and 2009, the
overall trend still can be interpreted as
increasing.
Figure 9: Broadband Users 2000–2010
Source: World Bank Survey, McNamara 2012
According to Caselli and Coleman (2001)
Internet adoption in general depends on
GDP per capita, the real cost of Internet
access, the telecommunication and Internet
infrastructure. Besides these factors much
research has shown that Internet usage each
year is highly correlated with the past years’
usage. These are all-important factors in
determining Internet (broadband) demand.
To get an estimation merely for broadband
growth we also add the relative price and
quality of broadband service. Below is the
linear model:
Where Y is Fiji’s GDP per capita, P is the
average price of broadband access in Fiji, C is
the infrastructure factor which is a proxy for
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 43
the penetration of information and
communication technology in people’s lives.
The percentage of individuals with personal
computers is considered as the proxy here.
Previous research by (Trkman et. al. 2008)
has found a relationship between individual
PC access and broadband access in EU
countries.
Figure 10. Fiji’s Broadband Growth
Year Users GDP Per Capita Infrastructure 2000 3500 3447 0.05
2001 5500 3582 0.05
2002 7600 3750 0.05
2003 9000 3862 0.1
2004 11000 4172 0.1
2005 13300 4323 0.1
2006 10677 4514 0.1
2007 13681 4566 0.1
2008 15713 4668 0.15
2009 15499 4610 0.15
2010 15752 4609 0.15
2011(e) 15900 4625 0.15
Source: World Bank Survey, McNamara 2012
We might expect a positive association
between Yt (GDP per capita) and usage since
higher income per capita will make it easier
for people to pay and have access to
broadband services. A negative value is
expected for !2 as higher prices will
5 are expected to be positive since better
infrastructure, lower comparative prices and
higher usage in the previous year would
positively impact the current years’
broadband demand.
Forecast for Fiji
Using the proposed model we can calculate
the following table by an OLS (ordinary least
square) regression as shown below in Figure
11.
Figure 11. Fiji’s Demand Growth Estimate
Coefficient Const -19346 GDP Per Capita 6.567 Infrastructure 55532.2 Last Years’ Users 0.258350
Source: World Bank Survey, McNamara 2012
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 44
This means each $1 increase in GDP per
capita will add 6.6 broadband users. A 1%
increase in the percentage of individuals with
access to a PC will add 555 users
(55532.22/100=555).
A unit increase in the number of users is
associated with a 0.25 increase in users for
the following year. This effect can account
for the slow growth after a decline. In other
words when the number of users grows in a
community this will lead to higher future
growth or a decline may lead to further
decline if other factors don’t change. This can
be viewed as a feedback loop.
We should note that these estimates merely
show an association and can be used at most
for prediction purposes. Such models do not
necessarily indicate a causal relation or
direction of causality. To study the causation
relationship between these factors a
comprehensive data set and study is
required. Thus, we don’t know if access to
more PC’s will increase the number of
broadband users or if the increase in
broadband users leads more individuals to
buy PCs.
B. Technology Choices
A point of debate for small island markets
like Fiji is which broadband technologies are
most appropriate in different contexts. Every
choice has pros and cons in terms of cost,
speed, reliability and other measures that
must be weighed against constraints. In
general low setup costs are necessary, and
providing service to remote areas is needed.
This remains the most challenging effort
from a technical standpoint. Two viewpoints
stood out in our interviews: broadband will
necessarily include mobile (3G, then LTE)
(although the backhaul still needs to be
there), and building broadband as demand
grows in an evolutionary manner is sensible.
It was noted that in some other small
markets such as Mongolia, the value
proposition has been to start with and then
move up the chain slowly (Darrel Owen,
interview). The UN suggests in a recent
report that satellite is the solution in the
Pacific sharing costs with neighbors (2011).
Our recommendations for Fiji’s further
broadband efforts are made using the
Analytic Hierarchy Process (AHP), which is a
structured technique for organizing and
analyzing complex decisions. Rather than
prescribing a correct choice of technology,
the AHP helps us find one that best suits our
goal and understanding of the needs and
limitations of Fiji. Our options are (ADSL,
BPL, Microwave, WiMAX and Satellite), and
our criteria factors are: range, cost, setup
cost and time, and rate capacity.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 45
Figure 12. Criteria of Broadband Technology Choices for Fiji
Technology Max Range Relative Cost Advantage Limitation
ADSL 5.4 km Average–High (Depending on
distance) Uses existing line
Bandwidth is distance sensitive
BPL 3km High Uses existing power lines
Expensive power line upgrade is required for Fiji
Microwave 5km
Low–Average (Depending on
number of towers)
Quick setup Point to Point
Standard WiMAX
10km Average Standardized NLOS
Rate per subscriber is limited to 2Mbps
Satellite Up to
36,000 km High Large coverage
Very expensive, limited capacity per subscriber
The first step in the analytic hierarchy
process is to model the problem as a
hierarchy which consists of an overall goal, a
group of options for reaching the goal, and a
group of factors relating to alternatives to
the goal.
As most observers see mobile playing a
major role in the future of broadband in Fiji,
mobile is included here--a mobile connection
to the network needs WiMAX which is
included in the analysis.
Figure 13. Hierarchy of Technology Choices
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 46
Analysis of the hierarchy is provided by
experts (from PTC’s Board, industry and
academic members) through a series of
pairwise comparisons that derived numerical
scales of measurement for each node. The
criteria are pairwise compared against the
goal for importance. The options are also
pairwise compared against each of the
criteria for preferences. Comparisons are
processed mathematically, and priorities are
derived for each node. The following results
were obtained, below in Figure 14. Weights
are used, and are normalized and shown as
percentages:
Figure 14. Results of Pairwise Comparisons
Criteria Weight
Range 13.7%
Cost 56.5%
Setup Time 8.5%
Rate Capacity 21.2%
The weight of each criterion demonstrates the normalized result of a pairwise comparison of each
criterion against another. Below is a portion of the PTC Fiji expert survey and the relevant
criterion matrix.
Figure 15. Expert Comparison Results of Broadband Features
Compare which Broadband feature is more important than the other one and then scale the importance
Range, Cost Very strong importance
Range, Setup Time Strong Importance
Range, Rate Capacity Equal Importance
Cost, Setup Time Strong Importance
Cost, Rate Capacity Moderate Importance
Setup Time, Rate Capacity Moderate Importance
The corresponding matrix for the survey is shown below, with darker colors indicating stronger
importance.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 47
Figure 16. Expert Comparison in Matrix Form
Range Cost Setup Time Rate Capacity
Range 1 1/9 7 3
Cost 9 1 7 5
Setup Time 1/7 1/7 1 1/5
Rate Capacity 1/3 1/5 5 1
The next step is to rate alternatives in order
to compare them with the criteria. In this
step there is a pairwise comparison of
alternatives according to each criterion.
These pairwise comparisons provide 4
different matrixes. The matrices are then
used to calculate the priorities for each
alternative according to our criterion.
Figure 17. Expert Comparisons in Matrix Form
Range: ADSL BPL Microwave WiMAX Satellite
ADSL 1 5 3 1/7 1/9 BPL 1/5 1 1/3 1/5 1/9 Microwave 1/3 3 1 1/5 1 WiMAX 7 5 5 1 1 Satellite 9 9 1 1 1
Cost: ADSL BPL Microwave WiMAX Satellite
ADSL 1 7 1/3 3 9 BPL 1/7 1 1/3 1/7 5 Microwave 3 3 1 1/5 3 WiMAX 1/3 7 5 1 7 Satellite 1/9 1/5 1/3 1/7 1
Setup Time: ADSL BPL Microwave WiMAX Satellite
ADSL 1 5 1/5 3 5 BPL 1/5 1 1/7 1/5 1/5 Microwave 5 7 1 5 7 WiMAX 1/3 5 1/5 1 7 Satellite 1/5 5 1/7 1/7 1
Rate: ADSL BPL Microwave WiMAX Satellite
ADSL 1 1 3 3 5 BPL 1 1 3 5 7 Microwave 1/3 1/3 1 3 5 WiMAX 1/3 1/5 1/3 1 5 Satellite 1/5 1/7 1/5 1/5 1
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 48
Figure 18. Weight Matrix of Technology Choices and Criteria
Range Cost
Setup Time
Rate
ADSL 0.09 0.33 0.16 0.35 BPL 0.05 0.04 0.06 0.37 Microwave 0.16 0.28 0.58 0.14 WiMAX 0.37 0.32 0.13 0.09 Satellite 0.33 0.03 0.07 0.05
The alternatives with respect to their
strength in meeting the criteria have been
evaluated and the importance of each
criteria determined. Next, the priorities of
each alternative with respect to our goal is
calculated. For each alternative we
calculated the following:
1. Its priority with respect to “range,”
multiplied by “range” priority with
respect to our goal.
2. Its priority with respect to “cost,”
multiplied by “cost” priority with respect
to our goal.
3. Its priority with respect to “setup time,”
multiplied by “setup time” priority with
respect to our goal.
4. Its priority with respect to “rate,”
multiplied by “rate” priority with respect
to our goal.
Adding 1-4 gives us the overall priority for
each alternative: adding the rankings of 1-4
gives us the overall priority for each
alternative as shown below. BPL and satellite
score very low compared to other options.
ADSL has an edge over WiMAX and
microwave making it the best option,
according to the prioritization of the experts.
Figure 19. ADSL: The selected technology option
Rank Technology Score
1 ADSL 0.28658
2 WiMAX 0.26162
3 Microwave 0.2391
4 BPL 0.11299
5 Satellite 0.07871
Implications for Fiji
From our AHP analysis, ADSL, WiMAX and
microwave links are the best choices
considering needs and constraints in Fiji. A
quick look at the current situation in Fiji
shows that ADSL and WiMAX are already
currently deployed. Unwired Fiji currently
provides WiMAX connections in Fiji’s
principal tourist spots and populated areas.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 49
WiMAX
Considering WiMAX range limitations and
the low density of population in non-urban
parts of Fiji, further WiMAX deployment
would be costly. Delivering a WiMAX
connection to a device can cost anywhere
between $4 to $30. This cost is in the upper
range for locales with a low population
density. Thus, it could address a small portion
of the demand if the bulk of users willing to
pay more than $20 are less than 30% of the
population. Thus, WiMAX does not appear to
be a sustainable technology to deliver
broadband to rural areas without
subsidization.
ADSL
The other option is ADSL, which requires a
landline. The past year has seen an increasing
trend towards replacing landlines with
wireless phones. Besides requiring a landline,
ADSL is distance sensitive, meaning that
bandwidth decreases significantly as the
distance between the user and provider
increases. Although both WiMAX and ADSL
are solid options in the populated and urban
areas of Fiji, they are less feasible for
delivering broadband to sparsely populated
areas.
Microwave
Microwave links, the traditional workhorse
of fixed-wireless broadband systems have
been around long before the term wireless
broadband was used. It’s a point-to-point
LOS wireless transmission method for up to
155 Mbps, with a range of more than 5 km.
Microwave infrastructure is significantly less
expensive than ADSL and WiMAX, especially
considering Fiji’s terrain. Although
microwave links have the great disadvantage
of limited data rates, this could be an
acceptable trade-off for serving the less
populated areas of Fiji. Considering the low
cost and setup time, microwave links are a
technology that should be considered by
providers to deliver Internet to the least
accessible areas in Fiji and could also be a key
element for providing further coverage in
Fiji. Although microwave links have two
disadvantages: limited data rates and line of
sight limitations, a clever network design can
overcome these problems and provide an
acceptable trade-off for serving the less
populated areas of Fiji. Considering the low
cost and setup time, microwave links are a
technology that should be considered by
providers to deliver Internet to rural areas in
Fiji and could be a key element for providing
further coverage.
Satellite and Broadband over Power Line
(BPL)
Acknowledging that these are two very
different technology solutions, we look at
them both here only in terms of a few
considerations. Both satellite and BPL scored
very low (0.03, 0.04) on the cost criteria, the
most important factor according to our
experts. BPL has challenges associated with
increased cost. For example, each time a
device is turned on or off, a pop or click may
be introduced into the line. Switching power
supplies can introduce noisy harmonics into
the line and power wirings have no inherent
noise rejection system. Thus, the system
must be designed to deal with these natural
signaling disruptions and work around them
which means new and more sophisticated
power line systems. This makes BPL
extremely costly for rural and remote areas
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 50
of Fiji. Meanwhile it still can be an option for
compactly populated areas of Fiji and
deployment in such areas is worth further
study.
Satellite also incurs a high cost to both users
and providers, usually 3-6 times higher than
an ADSL connection (Ida, 2000). Another
issue is rain fade which an important issue
for the Pacific islands (Cobb). While it is
costly and possibly not reliable, satellite can
still be considered as an option in remote
locations where other options are not
possible due to range limitations.
Recommendations for Fiji
ADSL and WiMAX services are already
available in all major cities including Suva,
Lami, Nadi, Nakasi, and Nausori geographic
areas (McNamara, 2012). These two
technologies are suitable to provide service
to the 50% of population who live in urban
areas. Our expert survey using AHP also
confirms that these 2 technologies are the
right option to further increase the access
rate in these areas.
Satellite connections are also already
available in Fiji by TFL (and FINTEL), but as
mentioned the price is very high, ranging
from $295-$465 per month
(http://www.tfl.com.fj), making it an option
only when all other technologies fail to reach
the user. According to our expert analysis
Microwave links have the potential to be
further employed to serve rural areas
specifically because of low installation costs.
Microwave links provide lower bandwidth,
but this is less of a problem in rural areas
because each is intended to serve only a
small population.
Microwave Cost Estimate
There are several factors that impact the
cost of delivering broadband to a rural area
in Fiji via Microwave links. Cost is mainly
influenced by distance, installation per link,
terrain, climate and reusability options.
Figure 20. Attributes of Microwave
Capacity Up to several Gbps
Distance influence on Costs
Cost per link with some incremental cost with the distance Fast deployment time
Terrain Suitable for any terrain Requires line-of-sight between two link end-points
Reuse options Equipment can be disassembled and relocated somewhere else
Climate Influenced by climate Adaptive modulation and a proper link planning reduces climate effects
Source: Mobile Backhaul vs Microwave, Tzvika Naveh, October 2009
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 51
We have calculated the cost to deliver broadband to Swani which is about 17 km. (10 miles) north
of Suva in the main island. The terrain is covered with tropical forests which increases trenching
costs of a fiber line $10-$20 per meter, but does not have a significant effect on the cost of
microwave link installation. Considering the effective range of each tower to be 4-5 km, to deliver
to Swani, 4 towers would be needed. The average cost of a tower that includes the equipment
cost, installation cost, antenna, and annual maintenance costs is shown in the table below.
Figure 21. Mobile Backhaul
Source: Mobile Backhaul vs Microwave, Tzvika Naveh, October 2009
Figure 22. Microwave Link Costs
Microwave Link Cost One Link 4 Links Equipment, Installation, antenna and maintenance
$16,000 $64,000
Erecting New Tower $50,000 $200,000 Total Cost 66,000 $264,000
As a comparison: the total cost of delivering microwave links to Swani are $264,000 compared to
the total cost of a fiber optic line which is essential for a technology like ADSL:
Figure 23. Fiber Installation Costs
Fiber Installation Cost Per Meter 17 km
Ethernet Switch $2500 $2500
Trenching Cost Per Meter (Includes infrastructure, renovation and construction)
Rural $30 $510,000
Rural (Tropical Forest) $40 $680,000
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 52
Figure 24. For Distances More than 1 km Microwave Links Cost Less than Fiber
Most rural communities like Swani have a
small population, making the demand for
broadband low as well, reducing the required
bandwidth capacity. Microwave links have
bandwidth limitations in contrast with fiber
technologies, but the limit will not be
reached with the low demand of a locale like
Swana or other rural areas of Fiji.
This order of magnitude estimation will
depend on the size of the village, and villages
along the way and other factors. To set goals
and judge bids in any reverse auctions for
universal service programs, governments
need these kinds of estimates.
In addition to capital investment, another major cost to maintain a broadband network is operational expenditure or OPEX. OPEX has three principal components: management costs, maintenance costs, and marketing costs. In Fiji, the bulk of management expenditures would be associated with new equipment and associated human resource management--understanding and mastering the technology. The maintenance cost would
mainly include cost of equipment maintenance and customer service operations. Since rural Fijians would be getting access for the first time, there are likely to be numerous failure reports in the first 1-2 years which mostly occur on the home user side. The last element is marketing costs which depend on specific strategies chosen by providers.
Below we estimate the maintenance portion of OPEX for deployment of microwave links in rural Fiji. First. It should be noted that microwave costs are distance-insensitive within the range of each link so the equipment maintenance cost majorly depends on the number of towers deployed.
We use Swani as the site to calculate OPEX per capita to deliver broadband via microwave:
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 53
Figure 25. OPEX Costs
Item Quantity Cost/Year Total/Year
Tower Rental 4 $1,000 $4,000
Energy 4 $500 $2,000
Maintenance 4 $1,500 $6,000
Customer Service & Technician 1 $9000 $9000
Total $21,000
Population 500
Annual Cost per Capita $42 Source: Nepomuceno, Napoleo (2010) Network Optimization for Microwave Wireless Backhaul.
Figure 26. OPEX Breakdown
Source: Nepomuceno, Napoleo (2010) Network Optimization for Microwave Wireless Backhaul.
The cost of customer service & technicians is estimated based on hiring one technician for each 100 households which is likely an underestimation, since initially more support is needed. Another issue that is relevant in Fiji’s environment is rain fade which can be handled with higher power output (MEF, 2011). This can increase energy costs by a small percentage. It is then also necessary to use fans or other cooling devices - a technical issue that depends on network design.
Customer service expenditures can be addressed to some extent. (In the US 65% of
failures occur at the home - this percentage is higher for rural households). Error detection systems and knowledge-based systems can help both technicians and users to understand the technology and reduce OPEX. Microwave links have a significantly lower CAPEX than fiber, but fiber has a lower operating cost. (Analysys Mason, 2011). In the table below the discounted present value of both technologies for Swani is compared and it is shown that microwave links have a much lower aggregate cost over a 10-year period. (After 10 years both technologies may face unexpected maintenance costs.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 54
Figure 27. Comparison of Microwave and Fiber Costs
Technology CAPEX Annual OPEX Present Value (10 Year Operation)
Microwave Link $264,000 $21,000 $452,634
Fiber $680,000 $0 $680,000
Assumed Interest Rate: 2%
C. Decision Tree Analysis of Investment and Demand
Decision tree analysis is a support tool for
decision-making that uses a tree-like model
of decisions to delineate the possible
consequences. It’s an effective method to
illustrate algorithms in decision analysis and
a means for supporting the complementary
decisions needed to for a BB Plan. ITU
consultant Bob Horton suggests this
methodology as a tool in drawing up BB
Plans and populating it with data from
countries that have already made decisions
on a number of levels or are in the process of
doing so (Horton, 2011).
To apply this method to the process of
creating a National BB Plan, Horton suggests
six levels of decision points (nodes) that
include: the foundation (initial
considerations/consultations), the goals and
targets, the institutional form of regulation,
the regulatory support mechanisms,
infrastructure investment and the industry
structure. Each of these levels has a number
of options. See appendix 2 for further
explanation and examples of use in
developing a National BB Plan.
Amongst decision-making support tools,
decision trees have several advantages.
• Simple to understand and interpret
• Valuable even with little hard data.
Important insights can be generated
based on experts describing a situation
(its alternatives, probabilities, and costs)
and their preferences for outcomes
• Possible scenarios can be added
• Worst, best and expected values can be
determined for different scenarios
• Can be combined with other decision
techniques
Small Island Broadband Investment
Decision Tree
A decision tree can help identify a strategy
that is most likely to generate the maximum
number of additional BB users through a
public private partnership (PPP). In our
decision tree we study two partnership
scenarios where a $10 monthly subsidy is
provided to users. The first scenario involves
giving a subsidy to urban users and the
second involves providing the subsidy to
rural users. In addition, we focus on two
relevant technology choices for each
scenario, based on the AHP analysis in the
previous section.
At the beginning of this report we show an
estimate for willingness to pay in urban
areas. We may drive a discrete probability
distribution by taking the midpoint of each
interval to represent willingness to pay:
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 55
Figure 28. Urban Willingness to Pay
Urban Willingness
to Pay
Percentage of
Population
$5 22%
$15 50%
$25 14%
$40 14%
We do not have willingness to pay estimates for rural areas, but assuming it has a direct
relationship with income, we can get a rough estimate by multiplying the urban estimates to the
ratio of average rural income to average urban income in Fiji.
Figure 29: Household Income Fiji
Average
Household Income
Number of
Households
Rural 11608 87562
Urban 23036 89347
Ratio: 0.50 --------
Source: Fiji Bureau of Statistics
Figure 30. Rural Willingness to Pay Fiji
Rural Willingness
to Pay
Percentage of
Population
$2.50 22%
$7.50 50%
$12.50 14%
$20.00 14%
Considering that the most inexpensive plan currently available is $16.64, a $10 subsidy would
increase broadband access by 50% in urban areas and 64% in rural areas. In addition we can
estimate the probability of successful coverage based on AHP scores previously calculated.
Attaching a probability of 1 to the rank1 (ADSL), the rest of the probabilities can be calculated
relatively:
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 56
Figure 31 Success Probabilities Based on AHP Scores
ADSL 1 BPL 0.39427 Microwave 0.834322 Wi-Max 0.912904 Satellite 0.274653
Using all the above information we can make the decision tree. For example the outcome of the
first branch is calculated by:
Number of Rural Households * Increased Penetration Percentage = 87562 * 64% = 56,039
Thus, according to the decision tree the optimum strategy to maximize increase in household
access is to provide a subsidy to rural users and choose microwave links as the technology. The
route is demonstrated in green.
Viewed from left to right as shown below in Figure 27, the decision tree has burst nodes (splitting
nodes that can be either a decision or a chance node), but no converging paths so branches can
never combine with each other. Three types of nodes are used in this model:
1. Decision nodes - commonly represented by squares
2. Chance nodes - represented by circles
3. End nodes - represented by triangles
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 57
Figure 32: Decision Tree Analysis: BB for Rural Fiji
Horton notes the need for targets that are
both transparent and thus open to analysis
and discussion. They need to be reasonable
and based on available evidence. As is often
the case in developing countries and noted
by many – getting reliable demand estimates
is extremely challenging and thus, regulators
in some countries, the Dominican Republic
and Peru for example have used a proxy
approach, using data from rural areas in
other countries where networks have been
built and made adjustments based on
demographic data to get proxy evaluations of
uptake and other measures. Pilot projects
are also useful ways to establish a starting
point for modeling and to accommodate the
lack of historical traffic and service data
(Horton, 2011) – this would be a useful way
to evaluate demand potential in Fiji.
In addition to building infrastructure in line
with usage, conducting cost benefit analysis
is required so that appropriate broadband
technologies are selected. In Australia for
instance, the government began with an idea,
a plan and money. A national company was
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 58
formed (NBN) to build a fibre (93%), wireless
(4%) and a satellite network (3%) –
technology choices depended on
appropriateness over the span of the
geography. Malaysia also had a plan that was
initially based on 80% fibre, but the
government subsequently revised this to
70% fibre, 20% wireless and 10% satellite.
The important point is that data was
available for these adjustment to be made.
(interview, John Turnbull, O3b)
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 59
Part 6. Who Will Pay for the Infrastructure?
A. Infrastructure Sharing
Our interviews suggest that not a great deal
is currently in the works to support
infrastructure sharing, although most agree
this makes sense. There is some sharing of
infrastructure with broadcasters and
Unwired Fiji is working with Digicel to share
towers. Government interviews
acknowledged the need for unbundling and
that policies are in the works. However,
despite deals in the making, there are not yet
incentives to share. Vodafone states they
already share infrastructure and have
policies in place to share towers. In terms of
backhaul from cell sites, self-provisioning
occurs – wireless carriers do it themselves.
Open access is not present in Fiji – all the
operators currently compete against one
another – they are independent and have
their own fiber. As a result this small place
has three separate infrastructures (which
includes University of South Pacific which
has its own facilities). A way forward is
mandating infrastructure sharing (interview
Aslam Hayat). If this occurred, strategically
placing fibre rings so that everyone could buy
access would be a way to lower
infrastructure costs. The government has
made announcements about infrastructure
sharing, noting that they are considering
mandating it. Some duplicate infrastructure
is already in place which however will require
assessment and coordination.
Sharing could be accomplished under
wholesale regulation – the regulator would
intervene in disputes about prices. There are
no existing regulations, only termination
rates for national and international calling
(regulated by Comcom, not the TAF).
Another option: nationalizing the cable
connection so anyone can buy access as has
been done in the Marshall Islands. This idea
however, is not supported currently
according to our interviews. In general,
unbundling is needed, but the rules for this
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 60
are not developed, and greater regulatory
development and business maturity from the
operators is needed. Also noted by Hayat,
carriers usually do not want to allow
competitors access--they are reluctant
because they do not think they can make
money from this arrangement. In most cases,
once they are forced to do this, however,
they experience success (interview, Aslam
Hayat).
B. Who Will Pay for Networks?
A broad universal service fund policy for Fiji
is currently being developed that seems
likely to include broadband services.
However, the perennial question facing Fiji
as in all emerging economies is the “who
pays” question—and before this question can
be answered, a demonstration of demand is
needed which has not yet been carried out in
Fiji. Government can help network
deployment by subsidizing the costs as has
been done in many places – however, a
revenue generating model for the mid and
long term – i.e. developing services from the
network is the obvious stepping stone to
recovering investment. Thus, creating an
environment where telecom vendors, small
business, and the wider society is supported
in arrangements to make new services
available is critical. As discussed, evolving
services around target areas that make sense
can create the base needed for further
investment. As an executive from a global
equipment provider noted, “The GDP is low
– maybe the services aren’t there—to
implement something is costly. The domestic
and international cost of backhaul is
expensive.” Another interviewee remarked, a
BB Plan comes down to having money and
putting in infrastructure, whether it’s the
incumbent carrier or a third party
construction arm, knowing what technology
will be utilized and an idea of how services
are going to be delivered.
C. Broadband Models
Public Private Partnerships
PPPs are the Fiji government’s preference
with the involvement of the principal carriers
already in Fiji (TFL, Vodafone). The PTC
Experts agreed that developing PPPs is a
priority for the National Broadband Plan
(81% agreed/strongly agreed). Observers
have indicated that PPP development is still
in the conceptual phase at this moment.
Arranging PPPs to fulfill the comprehensive
goals of a BB Plan including tele-health, e-
government, and other services provided
through a nation-wide infrastructure,
however it should be noted is a complicated
proposition.
A likely situation would have the government
funding network development with private
companies maintaining operations. In July
the World Bank presented in Fiji several
components of PPPs that can be considered
critical success factors. Chief among them
include transparency and predictability in
contractual agreements. A complementary
progressive regulatory framework is the
second element. Furthermore, in terms of
the public sector role and expectations, an
appropriate and transparent structure is
needed for managing funds, procurement
and disbursement, monitoring and
evaluation and project selection
(Beschorner, 2012). Overall, predictability
and stability need to be guaranteed traits of
the government. In terms of the private
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 61
sector, expectations include timely delivery
of quality services at a reasonable cost to
customers. Difficulties can occur even with
subsidies and other investment funds if
appropriate regulatory instruments are not
in place (e.g. open access).
Attracting private investment can be difficult
if government processes are not ready to
manage the endeavor. If the business case is
weak, it is even more vitally important for
government to create a conducive (i.e.
transparent and predictable) environment
(Beschorner, 2012).
Additionally, the capital investment by any
private partner necessarily requires some
short-term returns. A recent ITU report
(2012) describes the three distinct layers of a
broadband network which each have very
different characteristics with respect to their
cost and return on investment. The first layer
is the passive layer (civil works and dark
fiber) which can account for up to 80% of
costs and has a payback period of
approximately 15 years. The second layer is
the active infrastructure layer, where the
intelligence of the network is concentrated
with a 5-7 year period for return. The service
layer has a very different cost structure and a
much shorter rate of return. Thus the first
layer is the most difficult to account for due
to the high cost and length of return. One
option for a PPP is to have the government
invest in building the first layer in the rural
difficult areas, providing the infrastructure
for a competitive market for investment in
the second and third layers. The appropriate
technology choice can impact this costs and
return period. For example, wireless
technologies like microwave links (previously
described) can decrease the first layer cost
by eliminating construction works required
for fiber installation and shorten the return
period due to a shorter installation time.
A customized location-based policy could
also fit Fiji. Urban areas can have a
competitive broadband market, and a free
market can increase broadband access in
places like Savusavu, Sigatoka, Tavua,
Rakiraki, and Nadi. Meanwhile the same
policy might not increase access in rural and
less populated areas, due to low willingness
to pay. These areas are important for long-
term economic growth and social
improvements. Providing access to these
areas is important for fulfilling Fiji’s BB Plan.
A PPP where the government provides a
subsidy to the private sector might be the
best option for Fiji, given the data we have
collected about the readiness of the
government. The government would only
provide a subsidy that took the form of a
one-time grant to the private sector or a
continuous subsidy to households for
broadband.
The subsidy could be provided to the private
sector or households or a combination of
both to provide a safety net to private sector
investors.
Other PPP models include:
• Operations and Maintenance:
Government contracts with a private
partner to maintain the service. Under
this option, the government retains
ownership and overall management of
the network.
• Design-Build: Private partner provides
both design and construction of a project
to the government. This type of
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 62
partnership reduces time and save
money. It also reduces conflict by having
a single entity responsible to the
government for the design and
construction. In this way the government
owns the network and is responsible for
operation and maintenance.
• Design-Build-Maintain: In this case the
network system for some period of time
will be the responsibility of the private
sector partner. The additional benefit is
that maintenance risk is allocated to the
private sector partner. The government
owns and operates the network.
Budget Telecom Model (BTM)
As developed by LIRNEAsia, this solution
provides voice and data connectivity to
dispersed populations with little disposable
income (2011, Samarajiva, R & Zainudeen, A).
Basically, this involves radically reducing
costs on backhaul networks, access networks
and terminal devices. (so far the model has
been limited to mobile access) Success has
been identified in four countries in South
Asia: Bangladesh, India, Pakistan and Sri
Lanka and was a result of operators
innovating in unexpected ways to save costs
and make profits under less than ideal
regulatory regimes. This model is perhaps
not easily applied to the Fiji market however,
(and other markets with low population) due
mainly to the small size of the market.5
Evolutionary Route to Broadband
Given the cost to provide broadband to the
entire citizenry of Fiji coupled with lack of
data on potential usage, a gradual staged
5 Rashid Shafi, PTC Broadband Advisory Board, analysis of BTM
introduction of broadband would allow
demand to grow in line with supply. A
strategic plan for Fiji would include the
following:
1. Building institutional capacity in
government: architecting a plan,
organizing stakeholders, initiating
demand building activity (community
centers, tele-centers),
evaluating/measuring demand and other
indicators to identify the broadband
tipping point.
2. Beginning the effort with a demonstrable
pre-existing project that shows value. For
example, Singapore’s Tradenet.
Singapore started with a trade-related
exchange that demonstrated increased
efficiencies for business
3. Creating a broadband “climate” through
involving, educating and training the
population
The presence of community centers or
shared connections, or other centralized
points of access is an alternative or a means
to “evolve” demand by building interest and
usage ahead of large investment. If planned
correctly – aligning programs for training
users and maintenance of centers, cafes, etc.
along with a comprehensive program that
involved education, targeted investment,
development of local content and other
inputs, could be a scenario for building use-
cases in Fiji. These steps seem critical in
demonstrating that investment can show a
return to private investors.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 63
Holistic Approach - Broadband as an
Element of Comprehensive National
Strategies (Korea, Singapore)
Due in large part to the high cost of
deploying advanced networks, thus far the
most extensive examples of broadband
investment have occurred through strong
government involvement. Governments that
have taken an aggressively pro-ICT approach
like Singapore and Korea are motivated
largely for economic reasons: to encourage
foreign direct investment and to realize
multiple benefits from transforming their
economies to technological, information-
based ones. It is difficult to show empirically,
particularly through regression analyses that
these government ICT policies have led to a
sustained level of FDI, but solid evidence
suggests that these governments have had
success following holistic approaches to
broadband policy.
Singapore, the world’s leading island in
broadband penetration has aggressively
promoted the deployment of new
technologies and broadband access through
many initiatives. Due to Singapore’s lack of
natural resources, the government has
pursued an international-oriented business
focus for a number of years (Lim, 2006).
Service-based competition, speeds up to one
Gigabit per second and affordable pricing are
all attributes Singapore broadband.
In the case of Korea, the government’s
overarching ICT objective to create an
information society has been marked by its
strong and continually renewed commitment
from the ground up. The results have been
remarkable: just over a decade after the
announcement and implementation of its
initial ICT plan, the country now ranks at or
near the top of almost any global-level
survey measuring broadband use, uptake, or
readiness, or of ICT penetration. (Pereira,
Fife 2009). The picture is perhaps more
complex however—despite supply-side
advantages which include government
subsidies and a number of programs, other
factors additionally may play a role- platform
competition, high educational levels, and
macroeconomic credit stimulation were also
elements that may have affected outcomes
(Kalba, 2013)
Korea’s focus on promoting information and
communication technologies began in the
mid-1990s, with the establishment of the
Ministry of Information and Communication
(MIC) in 1994, and the announcement of its
overall broadband strategy, the Korea
Information Infrastructure (KII) in 1995.
Korea’s broadband market is currently an
open market, free of regulation and controls
over licensing and pricing and its incumbent
telecom provider, Korea Telecom, has been
completely privatized for the last 10 years
(Lee, 2004).
An aim of the Korean initiative was to
stimulate private sector investment and
competition in the broadband market, by
lowering the regulatory barriers to entry. A
second aspect of the initiative was for the
Government to provide a high-speed
network that would serve as a public
backbone, providing broadband services to
30,000 government and non-profit
organizations, as well as to research
institutes and to around 10,000 schools. The
government other ambitious goal: to provide
high-speed internet to every household in
Korea has nearly become reality, and the
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 64
government’s targeted internet speed
(threshold) is continually revised upward
(Pereira, Fife, 2009).
Although Fiji’s is a radically different place
from Singapore or Korea, and it is often
argued that the transferability of lessons to
the small island states is not possible, in fact,
some elements in both “success” cases seem
relevant: training and education initiatives to
spur development of an information society,
increasing competition, developing public
services, demonstration cases to identify
benefits. In the case of Singapore, they began
their efforts with TradeNet a service that
facilitates trade documentation online,
processes 99% of all trade permit
declarations, and is used by over 2,400
companies. This service has reduced
processing time from several days to five
minutes. The demonstration of positive
effects was a base to build further services.
Regional Cooperation
Many suggest that a common regulatory
framework would reduce costs and provide
greater stability for private investment.
External expertise could be coordinated and
regulatory experts and others would be
spread less thin (Hudson, 2009). The
organization of the Caribbean small islands,
ECTEL, the Organization of Eastern
Caribbean States for instance has a common
regulatory framework. There are of course
significant differences between the Pacific
and the Caribbean Islands which are closer
together geographically and to a large extent
have a similar colonial heritage based on the
British system.
The UNDP (2008) has also noted the value of
cooperative models given the great variety
of cooperative forums and agreements, as
well as education and other capacity-building
institutions—in addition to the need to build
“critical mass” in terms of expertise.
However, there is not yet an overarching
institution that could coordinate such
activity at the moment. In the Pacific Islands
the Pacific Islands Forum has developed a
regional digital strategy, although
cooperative activity in ICT’s appears limited
at this point (2010, Pacific Islands Forum).
In the process of our study we asked many
individuals from NGOs, the private sector
and government about the prospects for
regional cooperation. The dominant
experience is that collaboration and
cooperation is a challenge in the Pacific given
the differences in markets, populations and
governments. In the near term observers
universally regarded a regional/sub-regional
cooperative model for regulation and
infrastructure sharing as not likely. The
Pacific Regulatory Resource Center (PiRRC)
housed on the University of South Pacific
campus is however an example of a shared
resource – this central regulatory point for
the Pacific is based in Fiji and is a regional
resource for Pacific island countries
undertaking reforms of their ICT and
telecommunications sectors. It carries out
periodic reviews of sector performance,
issues best practice statements on
telecommunications regulation, and provides
technical support to regulators and policy
makers of Pacific Island member countries.
Although market-based regional
cooperation, infrastructure sharing and a
common regulatory regime are not yet
features of the Pacific Islands, the rationale
for a supranational authority makes sense to
many as a mutually beneficial goal for the
future.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 65
Part 7. Broadband Attributes in Emerging Markets
A scan of the research on “Small Island
Developing States” (SIDS) suggests that
small island states represent a special class of
broadband market and many of the “lessons
learned” from larger economies are not
entirely transferable, even in a scaled down
version. On the other hand, the reverse
situation may not hold as lessons learned
from small states could be ramped up to a
larger scale, or prove instructive for some
portion of a larger market (Sutherland,
2009).
A few countries with high levels of Internet
usage, but not high fixed broadband usage
(e.g. Albania) may have demand-side
obstacles such as high priced services or
supply side obstacles such as insufficient
broadband availability or some combination
of factors that are holding back broadband
penetration.
Given the range of experiences and
situations, there would be great value if
regulators, governments and non-
governmental organizations increased the
value of knowledge sharing. Either through
meetings or online mediated discussion with
documents and case studies available for
both academics and practitioners to access
this would seem to be of mutual benefit.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 66
What Drives Broadband in Emerging Markets?
There are common views of what factors underlie broadband adoption in emerging markets—
youth interest in mobile, income disparities, leapfrogging technology, and so on. Based on an
analysis of middle-income countries (GDP/capita of $2500 to $10,000) with high fixed and
mobile broadband penetration levels, these views turn out to be mostly stereotypes.
So what factors contribute to high broadband take-up?
Compact Countries
Eight of the ten countries with the highest fixed broadband (FBB) penetration levels (ITU 2010
data) were relatively compact countries, including four small island-based nations. The same for
the mobile broadband (MBB) leaders, although only one small island country appeared on this
list. Almost all of these countries had high population densities. The implication is that relatively
small countries can generally deploy broadband more rapidly than large ones—at lower unit
costs.
Role of Income
Relatively wealthy emerging economies like Botswana, Costa Rica, Gabon, and Lebanon do not
appear on either list. Eight of the ten that do (both lists) had incomes below $7600/capita.
Possibly distribution of income is a more important factor, as the former countries reflect
relatively high inequality whereas most of the FBB and MBB leaders are relatively egalitarian,
as reflected in their Gini coefficients. In addition, there are studies that have noted the higher
correlation of educational attainment with broadband penetration than income.
Regional Effects
There may also be some regional effects. Most of the FBB leaders fall into two clusters of
countries—an East European cluster (Belarus, Bulgaria, Romania, Serbia) and a Caribbean
cluster (Dominica, Granada, St. Lucia, St. Vincent and the Grenadines). Half of the MBB leaders
also fall into an East European cluster. This regional factor may reflect the influence of
neighboring countries on each other in fostering broadband development and/or of the nearby
more developed ones, namely western Europe and North America, respectively.
The Age Factor
The FBB and MBB leaders with relative equality of income are also the ones with older
populations—namely, the Eastern European cluster, all of which have median ages between 35
and 42; conversely, the countries with more vertical income structures generally have younger
populations (median ages 25 to 32). Yet most emerging markets have with large young
populations as well as relatively vertical income structures. This suggests that they will face
challenges in achieving high broadband penetration levels unless service becomes available on a
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 67
prepaid basis, which is more likely to occur in the mobile context.
Fixed-Mobile Interdependence?
Most of the countries with the highest MBB penetration levels also have high fixed penetration
levels. This calls into question the concept that mobile broadband thrives where there is the
least amount of fixed infrastructure and service availability. At a minimum it suggests that there
are two paths to mobile broadband growth, one that is linked to FBB development (and, at least
indirectly, to fixed telephone penetration) and the other that is independent of significant fixed-
line availability and use.
Role of Competition (FBB)
So what is driving fixed broadband in countries such as Dominica, Grenada and St. Lucia, which
rank at or near the top of the emerging markets pyramid of fixed broadband use? In addition to
compact size, competition is a notable factor, as both an incumbent telecom operator (Cable &
Wireless) and a private cable TV company offer broadband services in these markets. In the
case of Grenada, the cable operator (operating as Flow) offers a Triple Play service
(“watch.talk.click”) that includes Internet access at speeds up to 12 mbps for about $65 per
month, less than half the price charged four years earlier when the transmission rate was almost
an order of magnitude lower. In other words, competition is working.
Services Prices
Simultaneously, the $65 monthly price represents more than 3% of the pre-tax income of an
average household of four persons in Grenada or St. Lucia. Moreover, there is a limited number
of such “average” households in a population that includes smaller households of retired or
semi-retired expats, larger ones with more children and fewer cash-deriving workers, and a
growing number of single-person households. Until the price drops by another 50% or more,
broadband subscriber growth rates are likely to remain lower in the Caribbean markets than in
their East European counterparts, as has been evident in recent years.
Role of Competition (MBB)
On the mobile side competition has also been a very significant factor in the region. With
prepaid service available in small denominations, income has been much less of a “hurdle” in this
communications service market. Yet mobile broadband service has only recently appeared, if at
all, on many of the islands, including those of the east Caribbean to which the four fixed
broadband leaders belong to. In fact, MBB has (3G service) has been supplied by only one
operator or not at all in the Caribbean island nations that are FBB penetration leaders; by
contrast, in the Eastern Europe markets that appear on the top MBB penetration list there are
two or more (usually three) 3G operators.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 68
Implications for Fiji
The findings outlined above pose at least two implications for Fiji. Given the more rapid
adoption of MBB in Fiji compared to FBB, the question of the sustainability of this uni-modal
broadband development approach should be examined. Are the initial MBB subscribers “early
adopters” or do they represent a high-income group of limited size—and why is FBB growth in
the SME sector, where the population can learn useful broadband-related skills, not more
robust?
Secondly, the issue of FBB competition should be addressed, with the aim of introducing an
alternative to the incumbent carrier and thereby stimulating overall FBB rollout and service
price reductions. The alternatives in this context include cable TV-based FBB services, a fixed
wireless operator, and provision of FBB connections by one or more of the mobile operators.
The challenge rests in finding a solution that can apply across most of Fiji’s 100+ inhabited
islands, as a more complex multi-technology approach may limit price reductions.
*Prepared by Dr. Kas Kalba, President of Kalba International, Inc., telecommunications sector
advisors, and author of Broadband Leadership in Emerging Markets, December 2012.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 69
Part 8. Conclusions
Broadband provides access to a wide range
of content and services, such as education
and health, but is also important for social
networking--connecting islanders to those
who have migrated or who are temporarily
working elsewhere and to the associated
flows of remittances (5% in Fiji as a percent
of GDP in 2008, World Bank). Furthermore,
broadband plays important roles in key
economic sectors – enabling financial
services and supporting tourism and
transport. Certain aspects of implementation
are easier with a small geography, small
government and yet numerous challenges
have been described here in terms of
identifying and scaling down technologies
appropriately, identifying need and
affordability, constraints on use, and
regulatory challenges given the limits of the
market “frontier” which cannot support
multiple players. With business models as
with broadband plans – one size does not fit
all – encompassing goals are the optimistic
starting point from which a Fiji specific plan
can evolve. In studying “the case for BB in
Fiji” it seems clear that demand needs to be
cultivated and measured. In addition, strong
measures seem called for to establish the
government’s capacity to take advantage of
Fiji’s existing BB endowments and create the
Fiji’s version of its “information society.”
A. Business Models for Micro-Broadband Markets: Build from the “Local Why?” Relevance
One of the principal questions this report set
out to explore are the possibilities for
feasible business models to expand the reach
of broadband in a small market like Fiji. As
noted by many, Fiji has potential that has not
yet been exploited to tie in more effectively
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 70
to the global economy through developing its
status as a communications/transport/hub.
Building the business need along with the
network to support it is a gradual strategy
that could then be extended to the difficult
to serve customers. Markets such as Macau
and the Canary Islands for instance, have
implemented broadband to support business
needs that resulted in a subsidiary benefit for
the entire population. This is a different
approach than that taken by markets like
Japan and South Korea that have pursued
ubiquitous transformation. A more tailored
approach given existing constraints in
information, customer-base, and other
challenges seems more reasonable. We
suggest a unique vision for Fiji’s own version
of an information society be cultivated.
B. How Can Demand Be Supported?
As is the case in other rural markets, building
demand requires building the user base
effectively through champions, programs,
technical training, access (telecentres), and a
level of engagement that reaches people to
motivate use and allows for informed
delivery of what is needed and how interests
can be met at the community level.
Telecentres can be considered a “bottom-up”
approach that provides access and basic
telephony services; although often maligned;
the telecentre approach seems a useful tool
in the case of Fiji. Subsidized by the
government and thoughtfully introduced,
this could be an economical tool to drive
usage.
C. Who Will Pay for the Network?
Expansion of broadband in Fiji seems most
likely to be driven by government with
support from external donors. Beyond the
initial network implementation, operational
costs need to be covered – through the
development of services that will drive usage
is the most straightforward path. Thus, the
sustainable use case needs support and
development.
D. What Are the Lessons from Fiji?
Given that 56% of the worldwide emerging
market population lives in rural areas (Egyedi
& Mehos, 2012) the questions around
bringing access to rural Fiji have general
relevance. Without government
subsidization and financial incentives, rural
service provision, mobile and fixed) is not
profitable for carriers. Yet, when rural
coverage exists, the socio-economic benefit
on rural communities is positive (Samuel et
al. 2005). The local context of rural
infrastructure also means issues like network
maintenance and lack of electrical power. A
maintenance strategy needs to be developed
in tandem with the rural network
deployment, such as a remote monitoring
and maintenance station and provision for
timely repairs (Egyedi & Mehos, 2012)
Lessons from Fiji that are generally
applicable include the following:
Societal
- Involve communities to build demand
and ensure that services and needs are
aligned (development of participatory
practices and approaches)
- ICT training and education at all levels of
society to support usage, innovation and
buy-in
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 71
- stakeholder representation and
organization- external inputs and
community development
Institutional
- Strengthening of an independent
telecom/ICT regulators so stakeholders
can be organized and plans implemented
- Development of consultation processes
- Development of mechanisms to
effectively make use of skills and
resources offered by external
organizations
Economic
- Put resources to measuring (gathering
statistical data) and assessing for greater
certainty in policy development and
growth assessments
- Target obvious sectors that need
broadband and can support a national
business model
Technology
- Pursue evolutionary introduction of
technology and multiple broadband
technologies – build in line with demand
PTC Broadband Reports, Number 2
The second PTC Broadband Report will
continue to build from our growing
community of practice and will apply a multi-
disciplinary set of tools and expertise to
another market in the Asia Pacific. A diverse
group of scholars and practitioners has been
assembled through the exercise of this
research paper; wiki discussions, fieldwork,
interviews. The outreach around these
activities has created a loose network that
will be further activated in our second
project.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 72
Part 9. References
Norman, Terry, Afonso, N., (2011) The Cost of Capacity: Mobile Backhaul World Wide, Analysis
Mason, Feb.
Asian Development Bank, (2011) Strengthening Regulatory Capacity for Information and
Communication Technology Development in the Pacific, Project Data Sheet 44383-012.
Beschorner, Natasha, (2012) Enabling Environment for Broadband Development: Public-Private
Investment Models and Case Studies, ITU Pacific Broadband Forum, Nadi, Fiji, July 26-27.
Bhushan, Navnee, Kanwal Rai, (2004) Strategic Decision Making: Applying the Analytic Hierarchy
Process, Jan.
Cobb, Stephan, (2011) Satellite Internet Connection for Rural Broadband.
Corning, (2005) Broadband Technology Overview, June.
David, Charles H., Jim McMaster and Jan Novak, (2002) "IT-enabled Services as Development
Drivers in Low-Income Countries: The Case of Fiji." The Electronic Journal on Information System in Developing Countries.
Doorne, Stephen, (2004) Community integrated tourism development in the South Pacific,
Prepared for the ICT capacity building at USP project, Sept.
Egyedi, Tineke, Hehos, Donna (2012) Inverse Infrastructures: disrupting networks from below,
Edward Elgar Publishing, Ltd., United Kingdom.
Fiji Islands Health System Review 2011:
http://www2.wpro.who.int/asia_pacific_observatory/resources/FijiIslandsHealthSystemsReview-
FINAL.pdf
Fiji Online Times, (2013) “New Telecentre opens in the West,” Jan. 10.
Foreign Direct Investment, (2013) Asia-Pacific- Q&A Josaia Voreqe Bainimarama, Feb. 1.
Fried, Ina, (2009) Anyone in the state will be able to have a 10-minute web or phone visit with a
doctor, Cnet News: http://news.cnet.com/8301-13860_3-10143029-56.html
http://consumersonline.hmsa.com/overview/), Jan. 15.
Forman, Ernest H., Gass, Saul, I., (2001) "The analytical hierarchy process—an exposition,"
Operations Research, 49, 4, July/Aug., 469-486.
Frieden, R., (2005) Lessons from broadband development in Canada, Japan, Korea and the United
States. Telecommunications Policy, 29, 595-613.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 73
Greenstein, Shane, and McDevitt, Ryan (2012) Measuring the Broadband Bonus in thirty OECD
Countries, OECD Digital Economy Papers, No. 197, www.oecd.org/sti/working-papers
Haanses, Knut, Rastogi, Vaishali, and Subramanian, Arvind, (2010) Socio-economic impact of
allocating 700 MHz band to mobile in Asia Pacific, Boston Consulting Group, Oct.
Holmes, Jim, (2011) Stimulating Broadband in Fiji, ITU Broadband Project Stakeholder Workshop,
Aug. 17. (presentation)
Horton, Robert, (2011) Setting National Broadband Policies, Strategies and Plans, Discussion
Paper for GSR 11.
Hudson, Heather E., (2009) "Overcoming the Barriers of Isolation: Strategies for Small and
Isolated Developing States." GIIS'09 Proceedings of the Second international conference on
Global Information Infrastructure Symposium, IEEE Press, 209-215.
Iida, Takashi, (2000) Satellite Communications: System and Its Design Technology, IOS Press,
Japan.
ITU, (2012) The State of Broadband 2012: Achieving Digital Inclusion for All, International
Telecommunications Union, Geneva, Switzerland.
Kalba, K., (2013) Asia and Pacific Outlook and Practice, Kalba International.
Kshetri, N., (2012) Cybercrime & Cybersecurity Issues in the Developing Pacific Island Economies;
the current state, future prospects and policy measures. Pacific Telecommunications Council
(PTC) Conference, Jan. 8.
Kim, Eun-Ju, (2012) Telecom/ICT Development in the Pacific and Broadband for the Future,
Pacific Broadband Forum, July 26, Denarau Island, Fiji. (presentation)
Kim, Yongso, Kelly, T., Raja, Siddhartha, (2010) Building Broadband: strategies for the developing
world, World Bank, Washington D.C.
Lattemann, C. et.al., (2006) “eServices as pull strategies within public private partnerships—
evidence from case studies,” University of Potsdam.
Lee, C. & Chan-Olmstead, S.M., (2004) “Competitive advantage of broadband internet: A
comparative study between South Korea and the United States.” Telecommunications Policy, 28,
649-677.
Lee, Sangwon, Brown, Justin, S. and Lee, Seonmi, (2011) “A Cross-Country Analysis of Fixed
Broadband Deployment: Examination of Adoption Factors and Network Effect,” May.
Lim, R., (2006) Masterplan to transform InfoComm. The Business Times, Singapore, July 3.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 74
Malcolm, Jeremy, (2012) “Consumers in the Information Society: Access, Fairness and
Representation,” Consumers International 75-90.
Mcmaster, J., M Kato and N. Khan, (2004) "Economic impact of ecommerce on small tourism
enterprises." Prepared for the ICT capacity building project at USP.
McNamara, Stephen, (2012) Telecoms, Mobile and Broadband, Buddecomm.
MEF, (2011) Microwave Technologies for Carrier Ethernet Services. Jan.
Singh, Seema M., and Mehta, Satish, “Broadband Over Power Lines A White Paper.” State of New
Jersey.
Ministry of Communications, Fiji (2011) National Broadband Policy, Government of Fiji, final, July.
Ministry of Communications, Fiji (2010) National Broadband Policy, Government of Fiji, first
release, Oct. 13.
Moffat and Eley, (2011) Barriers to the up-take of telemedicine in Australia – a view from
providers: http://www.rrh.org.au/publishedarticles/article_print_1581.pdf
Mooney, Sean, (2012) Secret to Fiji’s appeal, Sydney Morning Herald, March 10, p.17.
Mok, P., K.S. Koong and L.C. Liu, (2002) “Community Technology Centers and the Digital Divide:
Implications for Computing Educators Computer Information Systems in Graduate Studies
Program” Southern University at New Orleans, available at
http://www.aitp.org/isedj/isecon/2002/341b/ISECON.2002.Mok.pdf
Mutuku, Teresia, (2012) WACC supported Telecentre connects rural communities,
http://waccglobal.org/component/content/article/1814:wacc-supported-te
Narayana, Jashwini, Anshu Mala and Rajiv Naidu, (2009) "Clicking Away: Fiji’s ICT Industry."
Global Journal of Enterprise Information System 21-35.
Negin, J. Irava, W. Leon D., Malau, C. & Morgan, C., (2012) Sustainable health financing in the
Pacific: tracking dependency and transparency, University of Melbourne, Nossal Institute for
Global Health, Working Paper Series, Nov.
Nepomuceno, N. (2010) Network Optimization for Microwave Wireless Backhaul, Doctoral
dissertation, Dec. 17.
OECD, (2011) “National Broadband Plans” OECD Digital Economy Papers, No. 181, OECD
Publishing. http://dx.doi.org/10.1787/5kg9sr5fmqwd
Pacific Island Forum, (2010) Network Strategies Final report for the Pacific Islands Forum
Secretariat, Report Number 29029. June 11.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 75
Pereira, F., Fife, E., (2009) The Effectiveness of Government Policies in Broadband Deployment: an
assessment of select Asian Countries, Conference Proceedings, Pacific Telecommunications
Council, Jan.
Primary health care: Fiji’s broken dream, Bulletin of the World Health Organization:
http://www.who.int/bulletin/volumes/86/3/08-020308/en/index.html
Samarajiva, R. Zainudeen, A., (2011) "Connecting Asia's Poor through the "Budget Telecom
Network Model": Innovations, Challenges and Opportunities," Mobile Business (ICMB), 2011 Tenth International Conference 20, 21, pp. 51-59, June, doi: 10.1109/ICMB.2011.50
Sayed-Khaiyum, Aiyaz, (2012) Opening Remarks, ITU/CTO Broadband Forum, Nadi, Fiji, July 26.
Scheyvens, R. & Russell, M., (2012) Tourism and poverty alleviation in Fiji: comparing the impacts
of small- and large-scale tourism enterprises, Journal of Sustainable Tourism, 20, 417-436.
Sein, M.K. & Harindranath (2004) Conceptualizing the ICT artefact: Toward understanding the
role of ICT in national development, The Information Society, 20, 1, 15-24.
Smith, Daniel, (2011) A New Look at Broadband for the Remote Islands of the Pacific Forum
Countries, Pacific Telecommunications Council, Conference Proceedings
Strover, S., G. Chapman and J. Waters, (2004) “Beyond community networking and CTCs: access,
development, and public policy,” Telecommunications Policy, 28, 465–485.
Sutherland, Ewan, (2009) “Telecommunications in Small Island Developing States,” 37th Research
Conference on Communication, Information and Internet Policy, Sept. 25-27.
Sutherland, Ewan, (2010) “Ubiquity and broadband in small island developing states,” ITS Asia-
Pacific Regional Conference, Wellington, Aug. 26-28, http://www.iscr.org.nz/ITS_Asia-
Pacific_Regional_Conference
Sutherland, Ewan, (2011) “Broadband in small island developing states,” Pacific
Telecommunications Conference, Connecting Live 24/7, Jan. 16-19.
TAF Response to Broadband Policy_020811
TeleGeography, GlobalComms Database, Fiji 2012.
Trkman, Peter, Blazic Borka, and Turk, Thomas, (2008) “Factors of Broadband Development and
the Design of a Strategic Policy Framework,” Telecommunications Policy, 32, 2, 101-115.
United Nations, (2008). Economic and Social Commission for Asia and the Pacific. Enhancing
Pacific Connectivity: The Current Situation, Opportunities for Progress. United Nations. New
York.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 76
Yongsoo, K., T. Kelly, and S. Raja, (2010) “Building broadband: strategies and Policies for the
developing world,” Global Information and Communication Technologies (GICT) Department,
World Bank, available at
http://siteresources.worldbank.org/EXTINFORMATIONANDCOMMUNICATIONANDTECHNO
LOGIES /Resources/282822-1208273252769/Building_broadband.pdf
Y. Yuan and M.J. Shaw, (1995) Induction of fuzzy decision trees. Fuzzy Sets and Systems, 69, 2, 27
Jan., pp. 125-139.
World Bank Survey, http://data.worldbank.org/
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 77
Part 10. Appendices
Appendix 1. PTC Expert Survey Results
A short expert survey was administered to
invited participants in the PTC and
practitioners, academics and government
officials in Fiji. The 20 respondents include
representation from NGOs, industry,
consultants, non-profits. Seventy-five
percent of those answering the survey
participated in follow-up interviews for
further discussion of their views. Since much
of the data needed to understand the market
potential for broadband expansion in Fiji is
difficult to acquire, we endeavored to
capture the state of thinking on Fiji’s
potential from sources that fit our criteria for
reliability [direct and recent experience in
the telecom market of Fiji, recommendations
from other experts, and individuals directly
involved in the drafting and execution of the
Fiji Broadband Plan]. Summary results are
shown below:
To what extent do you think these items are needed so that Fiji can proceed with its National
Broadband Plan? (percent agreeing to a great extent/some extent)
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 78
To what extent are the following items Fiji needs to address to be Broadband-ready? (percent
agreeing/strongly agreeing)
To what extent are the following promising targets for building BB demand in Fiji? (percent
agreeing to a great extent/some extent)
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 79
What in your opinion is the best way a broadband platform in Fiji can be realized? (percent
agreeing to a great extent/some extent)
How much do you estimate that people will be willing to spend on broadband per month? (in Fiji
dollars)
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 80
What is your projection for Fiji’s broadband market for the next 5 years? Growth will be:
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 81
Appendix 2. Decision Tree and Broadband in a Broader Context An example of how decision trees can be
used to support decision-making has been
presented by Robert Horton in his ITU
discussion paper (Horton, GSR11) and are
recreated below. As noted in our report a
decision tree uses a tree-like model to depict
decision pathways and possible outcomes.
A Decision Tree has three types of nodes:
• decision nodes (represented by squares)
• chance nodes (represented by circles)
• end nodes (represented by triangles)
The squares represent the focus of a
fundamental decision to be made. The
triangles provide the set of options or
solutions that are available to the decision
maker. The circles usually sit between the
squares and the triangles and they introduce
a probability (where appropriate) to assist a
decision maker in illustrating a chance event.
For example the results of a coin toss can be
demonstrated with a chance node.
In applying this concept to the creation of a
National Broadband Plan, the effort can be
captured by at least 6 levels of decision
nodes. This is shown in Figure A, which sets
out the tree.
The decision tree is shown in a simple form
because the subjective probabilities
associated with any chance node will vary
from country to country and are influenced
by many variables.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 82
Figure A. Decision Tree
Six Levels of Decision Points Decision required
1.FOUNDATION : initial
broadest consideration and
consultation
b
2.GOALS & TARGETS
3.INSTITUTIONAL FORM OF
REGULATION
4.REGULATORY SUPPORT
MECHANISMS &
INITIATIVES
5.INFRASTRUCTURE
INVESTMENT
Decision node
End node
6.INDUSTRY STRUCTURE
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 83
The levels of decision nodes to be addressed are:
1. Foundation: the initial consideration and consultation which informs and engages broad
stakeholder involvement in creating the broadband vision of the future
2. Goals and targets: These should not be set lightly or slavishly. They can appear deceptively
simple but to be set properly they require comprehensive understanding and application
of several dimensions, together with an appropriate definition of “Broadband”.
3. Institutional form of regulation: This relates to the form of the regulator, and its
responsibilities e.g. independent, converged, integrated, industry specific.
4. Regulatory support mechanisms and initiatives: Which are relevant to enabling the best and
practicable solutions for a particular country in order to successfully achieve the vision and
outcomes. The culture and attitude of the regulator are important.
5. Infrastructure Investment: Measures to assist and encourage industry and service
development e.g. direct investment by government, private industry investment, and PPP
schemes.
6. Industry Structure: The philosophical approach to the ultimate industry structure needed,
or that which is already achieved and which best serves the needs of the Broadband Plan.
In ascending the tree, there need not be strict adherence to the numerical sequence of decision
nodes. Indeed, many countries have followed a varying sequence. However, Levels 1 and 2 would
be the most efficient and logical starting sequence as well as the lowest risk for a well-informed
national plan.
Whilst the end nodes depicted on the diagram represent the nominal range of options available to
a country at the decision point level, there can in some cases be a combination of options. At each
level there is the experience of at least several countries to turn to for formative thinking.
Examples of the options faced by national decision makers at each level of the Decision Tree are
given in the following Figures B-G.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 84
Figure B. FOUNDATION, LEVEL 1
Degree of consultation
… plus cost-benefit analysis
Figure C. GOALS AND TARGETS, LEVEL 2
Types of goals and targets
De
peak speed,
penetration
subdivided or
dual targets
actual speed,
penetration,
pricing
application
driven
Within
Ministry
broader
Government
Industry Public, users
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 85
Figure D. REGULATION, LEVEL 3
Institutional form of Regulation
De
Figure E. REGULATORY SUPPORT, LEVEL 4
Regulatory support mechanisms
Ministry or
Department
Independent Convergent Integrated
prescriptive
-technology -structure
open -technology -structure
supportive -spectrum -access rights -UAS
forebearing -incentives -partnerships -UAS
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 86
Figure F. INFRASTRUCTURE INVESTMENT, LEVEL 5
Infrastructure investment choices
De
Figure G. INDUSTRY STRUCTURE, LEVEL 6
Industry structure envisaged
De
direct govt
investment
targeted govt
investment
public-private
partnership
private
investment
monopoly
provision
oligopoly
provision
open service
competition
open platform
and service
competition
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 87
Appendix 3. Broadband Plan – Institutional Arrangements, Process and Targets
Current publications state that general coordination is to take place through the Ministry of
Communications, and a “Broadband Policy and Programme Committee” will oversee the policy,
plan and program implementation. Members are designated from private industry, the Ministry,
TAF, and elsewhere (National Broadband Policy, Oct. 13, 2011). This committee has not yet been
established. Nine targets are listed in the Fiji government’s action plan:
1. competition and access
2. community access (all communities over 250 people)
3. individual access
4. affordability
5. community access (community broadband centres) – CBC
6. broadband penetration
7. school access
8. transactions with government
9. lead applications in government programs (health, education, tourism, agriculture/fishing)
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 88
Appendix 4. Telecom Service Providers The major owner of telecom operators in Fiji
is The ATH Group, Amalgamated Telecom
Holding Limited. From its web site
(www.ath.com.fj):
ATH was incorporated as a public company
on 10 March 1998 under the Companies Act
1983, and commenced operations on 16
December of the same year. It was set up to
consolidate and manage Government's
investments in the telecommunications
sector as part of the public sector reform
programme.
Following an international bidding process
conducted by the international investment
bank, Credit Suisse First Boston, the
Government sold its 49% strategic stake in
ATH to the Fiji National Provident Fund
('FNPF') in November 1998. The FNPF
acquired an additional 2% of the issued
shares from Government in September 1999
in accordance with a Sale and Purchase
Agreement entered into in November 1998.
It reduced Government's shareholding in
ATH, at that point, to 49%. In early 2002,
Government further reduced its
shareholding through two tranches. It sold
9.7% of the issued shares through private
placement to six institutions in January
2002. A further 4.7% was sold through a
Public Offer in March, in which over 1,000
investors participated. The Government
currently owns 34.6% of the issued shares of
ATH while the FNPF has increased its
shareholding to 58.2%.
Fiji’s government institutions are connected
to the profitability of the dominant
operators. The major ATH businesses are
listed below.
Company Business Web Site
Connect ISP www.connect.com.fj
Fiji Directories Limited Directories www.yellowpages.com.fj
Telecom Fiji Ltd. (TFL)
Telecom Fiji Limited (TFL) is the sole provider of
local and national (trunk) telephony services, and
owns the only public switched telephone network
in Fiji. The TFL network consists of 55 telephone
exchanges throughout Fiji and Rotuma,
connecting more than 101,000 customers.
www.telecomfiji.com.fj
TFL Shop Retail sales
TransTel
TransTel Limited is a privately held Fiji company
that processes financial transactions over
telecommunications networks. The company also
manages and maintains Fiji’s public phone service
facilities
www.transtel.com.fj
Xceed Customer Premises Equipment www.xceed.com.fj
Vodafone Fiji Dominant mobile operator www.vodafone.com.fj
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 89
Appendix 5. Structure of Communications Market in Fiji
Wireline Market Overview:
The fixed line market in Fiji was expanding
until 2009, when it reached a peaked of
144,500 covering 86.5% of the population
seen in Table 1. In the last 3 years, however,
the number of lines has decreased by almost
10%; a trend that is continuing in a
downward direction. Another interesting
trend seen in Table 2 is the high increase in
the number of landlines between 2007 and
2009 after years of stagnation, which can be
explained by the de-regulation of the sector
after the Telecommunications Act of 2007
and the consequent drop in prices that
occurred.
Table 1. Annual number, growth and household penetration of fixed lines in Fiji
Year Total lines (PSTN) Growth (%) H’hold pen (%)
2005 107,000 1.9% 67.9%
2006 108,362 1.3% 67.4%
2007 121,800 12.4% 74.8%
2008 129,100 6.0% 78.2%
2009 144,500 11.9% 86.5%
2010 140,000 -3.1% 82.7%
2011 130,000 -7.1% 76.7%
Source: TeleGeography
The wireline market continues to be
dominated by Telecom Fiji (TFL) even after
the Telecommunications Act of 2007. More
than ten companies have tried to enter the
market since 2007, but their share has never
surpassed 5%. TFL continues to be the de
facto monopoly and it doesn’t seem to be
affected by the new deregulatory
environment (TeleGeography). Furthermore,
the market as shown, is not growing which
makes it even more difficult for new
companies to enter.
Table 2. Annual number of subscribers with fixed lines in Fiji
Provider 2006 2007 2008 2009 2010 2011
TFL 108,362 121,800 129,100 140,500 140,862 129,845
Source: TeleGeography
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 90
Wireless Market Overview:
In 2006, as Table 3 shows, Fiji’s mobile
wireless business serviced only 32.1% of the
population. In 2011, 5 years later, the
number had increased by almost 150% to
754,735 meaning 84.8% of Fiji’s population
theoretically now has a cell phone (although
this figure does not account for those with
multiple phones). The increase in the number
of mobile lines was the result of several
trends like cheaper devices, but the main
increase in the number of lines occurred
between 2007 and 2008, when after the
Telecommunications Act was approved and
the monopoly in Fiji ended, prices went
sharply down, making it more affordable for
people to actually own a mobile device
(Hudson). Furthermore, most people in Fiji
have 2G network phones with 3G accounting
for only a small part of the lines (3G still
doesn’t represent more than 7% of the
number of lines).
Table 3. Annual number, growth and household penetration of mobile lines in Fiji
Year Total Growth (%) Pop. Pen. (%) 3G 3G Growth (%)
2006 277,125 35.8 32.1 0
2007 379,600 37.0 43.7 0
2008 742,850 95.7 84.7 1,000
2009 762,480 2.6 86.4 7,000 600.0
2010 692,122 -9.2 77.8 17,500 150.0
2011 754,735 9.0 84.8 50,000 185.7
Source: TeleGeography
The wireless market in Fiji is dominated by
Vodafone Fiji, a joint venture between
Vodafone and TFL. This venture started in
1994 as a monopoly until 2007 the
Telecommunications Act ended their
monopoly. In 2008, Digicel a multinational
with wireless operations in the Caribbean
entered the market, however by 2010,
almost 2 years after entering the market,
Digicel had less than 10% of the market
share. In the last year and a half Digicel has
increased its market share to 15%, Vodafone
Fiji has a near monopoly with 85% of all
subscribers. The goal of the
Telecommunications Act of 2007 was to
promote competition but for the mobile
business, even though, it increased
competition by adding a new player, it hasn’t
ended the monopoly power of the
incumbent.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 91
Broadband Market Overview:
The Internet market in Fiji is small, only
14.4% of all households have connections (in
24,300 households) as shown in Table 6.
Most connections are not broadband, with
DSL representing a small part of those total
users. Growth has decreased in the last 2
years, from an average of 35.7% annual
growth from 2007 to 2009 to 4.5% in 2011.
Again, the initial growth beginning in 2007
was the product of the deregulation, but it
seems that growth has now stalled.
Table 4. Annual number, growth and household penetration of broadband in Fiji
Year Total Growth (%) H’hold Pen (%) DSL
2006 8,500 21.4 5.3
2007 11,500 35.3 7.1
2008 15,600 35.7 9.4 380
2009 21,000 34.6 12.6 500
2010 23,250 10.7 13.7 1,800
2011 24,300 4.5 14.4 1,850
Source: TeleGeography
In the Internet market, the two main players
are TFL and Unwired Fiji. Similar to other
markets, TFL dominated until 2007, when
the Telecommunications Act ended their
monopoly. Since then, several other
companies have entered the market,
including ISPs and other service providers.
Most haven’t been successful with the
notable exception of Unwired Fiji, which has
a 10% market share, and uses WiMAX.
Competition has been prevented by the fact
that TFL controls the only submarine cable
that connects Fiji to the Internet and they
have decided to maintain high prices in order
to connect their competitors to the cable.
Even though the Telecommunications Act
tried to prevent this, it was delayed in the
interim, and not until 2010 did the regulators
decide to take action and order TFL to lower
interconnection prices. Furthermore, in
2011, after the creation of TAF, they were
able to create the regulations mandated by
the Telecommunications Act to manage the
rules on capacity leasing and interconnection
to the submarine cable. Unwired Fiji was the
only company that was able to successfully
enter the market in a meaningful way despite
all the barriers that TFL tried to establish to
prevent them from entering. Part of their
success is because they provide service
through WiMAX. TFL continues to have over
80% of the market share and it has actually
increased its market share in the past couple
of years as shown below in Table 5.
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 92
Table 5. Annual Market Share for Internet Service in Fiji
Provider Sep
2010
Dec
2010
Mar
2011
Jun
2011
Sep
2011
Dec
2011
Telecom Fiji
(TFL) 73.4% 77.4% 78.4% 81.9% 81.4% 81.3%
Unwired Fiji 8.6% 10.3% 10.6% 10.9% 10.7% 10.9%
Source: TeleGeography
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 93
Appendix 6. Interview List
Ronald Box, CEO, Telecom Regulatory Authority, Fiji (interview Dec. 8, 2011)
Muhammad Aslam Hayat, Director, PiRRC, Pacific ICT Regulatory Resource Centre (interview
Oct. 2012)
Shivnesh Prasad, Regulator, Fiji (interview Nov. 7, 2012)
Chris Vonwiller, Entrepreneur, Board Member Appen Butler Hill (interview April 23, 2012)
Chaminda Senewiratne, Head of Data and Broadband Services, Vodafone Fiji Ltd. (interview Nov.
3 2012)
Anjeela Jokan, Dean, Science and Technology, U. of South Pacific [call Oct. 26, 2012]
Jim Holmes, Director, Incyte Consulting (contributor to Fiji Broadband Plan, 2011) (interview May
12, 2012, editorial commentary provided, Feb. 23, 2013)
Darrell Owen, development and ICTs consultant (interview March 2011)
Salanieta Tamanikaiwaimaro, activist (interview May 18, May 19, 2012)
Bob Lyon, Chairman Fiji Development Bank, former Chairman FINTEL (interview June 18, 2012)
Mike Usmar, CEO, Computer Clubhouse, New Zealand (email comments)
John Turnbull, Sales Director, O3b (interview Dec. 4 and 5, 2012)
Ioane N. Koroivuki, Chief Executive, Fintel (interviewed July 18, 2012)
Broadband in Fiji: A Micromarket Case Study | PTC Broadband Reports, Number 1
914 Coolidge Street | Honolulu, HI 96826-3085 | Phone: +1.808.941.3789 | Fax: +1.808.944.4874 | Email: [email protected] | Web: ptc.org 94
About PTC
The Pacific Telecommunications Council (PTC) occupies a unique place in the dynamic and rapidly
growing world of global communications. An international, non-profit, non-governmental
membership organization, PTC is the leading membership organization for telecommunications
professionals with interests in the Asia-Pacific region.
PTC’s members are found worldwide, and membership is open to all who share an interest in the
development and beneficial use of telecommunications and related technologies in Asia-Pacific,
including the Americas, Asia, Oceania, and the Pacific Islands.
Through its annual conference, committees, events, and initiatives, PTC brings together senior
industry leaders and provides them with opportunities to build partnerships and share insights on
industry trends, business strategies, policy and regulations, best practices, and new
communication technologies and services.
PTC’s annual conference serves as one of the world’s most collaborative networking events for
senior industry professionals. Providers and users of communication services, as well as policy-
makers, technologists, lawyers, scientists, engineers, and academics come together to engage in
industry issues and to do business.
To learn more about PTC, including how you can become a member, please contact:
Pacific Telecommunications Council 914 Coolidge Street, Honolulu, HI 96826-3085
+1.808.941.3789 [email protected]
ptc.org