No drop in mobile internet prices in PNG
There is a lot of news in the telecommunications sector in Papua New Guinea (PNG), with an impending purchase of Digicel, the possible entry of a new company, Telikom PNG outages and more. But there is still no reduction in the price of mobile internet.
We began our price watch research just after the official launch of the Coral Sea Cable and as the last sections of the Kumul Cable were laid. Considering all the statements, promises and predictions made at the time, we planned to create charts with falling trend lines and expected hard analytical work. But the job was too simple.
We check the data prices offered via smartphone menus every Monday and each time there is no change. Since our last update in March 2021 and until the end of March 2022, there have been no price increases or decreases. We focus on mobile internet data pricing, as fixed broadband connectivity in PNG lags behind other Pacific countries and other parts of the world. The offers have remained consistent since the beginning of 2020: you can see all our updates.
You may be wondering if this regularity is because the market price is appropriate. However, PNG ranks very low in terms of affordability compared to other countries.
You could be forgiven for thinking that our research is uninteresting. We cannot produce graphs as they would simply show horizontal lines indicating constant internet data costs over time. You might want to forgive the politicians and others who predicted price drops when the Coral Sea Cable launched two years ago. But such predictions are still being made. The head of the country’s internet wholesaler DataCo, Paul Komboi, predicted a 50% drop in retail prices by the end of 2022 during a speech in September last year. We will continue to monitor prices to determine if such a prediction comes true.
It should be noted, however, that Mr. Komboi is not in a position to influence retail prices. He heads DataCo, which sets wholesale internet prices, based on guidelines stipulated by regulator NICTA. So even if Mr. Komboi is quoted as saying that retail prices will go down, he cannot give such a guarantee. DataCo sells Internet bandwidth to mobile carriers and Internet service providers at wholesale prices, and then these companies sell Internet to consumers at retail prices. The lack of retail price movement may be due to the lack of competition in the mobile retail market in PNG, with Digicel holding over 90% market share.
Meanwhile, other developments in PNG’s telecommunications sector are worth reporting.
The Australian telecommunications company Telstra will buy the Pacific branch of Digicel. That is, Digicel’s operations in six Pacific countries: PNG, Fiji, Nauru, Samoa, Tonga and Vanuatu. But he won’t do it alone. The Australian government will provide substantial assistance. In fact, Australia will disburse most of the funds, although Telstra will eventually own all of Digicel’s operations in the Pacific. The deal has received mixed responses: from comments welcoming the decision to calls for it to be rescinded. PNG’s Independent Consumer and Competition Commission (ICCC) has given the green light to Telstra’s takeover of Digicel’s PNG business and clearance has also been granted by the regulator.
A key driver of this deal is the substantial debt burden held by parent company, Digicel Group. Although it has a large market share and is profitable in PNG and other Pacific countries, the business as a whole has incurred heavy debt, which has caused it to be receptive to the sale of part of its operations. It remains to be seen whether this trade deal will result in tangible improvements to Digicel’s service in PNG and other Pacific countries where it operates.
Meanwhile, the PNG parliament recently passed a tax – a variant of the one originally included in the November budget – that will apply to companies with more than 40% market share in the banking and banking sectors. telecommunications. The tax will apply to BSP and Digicel. BSP will have to pay K190 million per year, with the first payment due on September 30, 2022. The Digicel tax is a one-off K350 million, due just one week after the bill is passed by Parliament . The company failed to pay on time and its executives reportedly flew out of the country for fear of possible jail time for non-compliance.
Amalgamated Telecom Holdings (ATH), a public company listed on the South Pacific Stock Exchange in Fiji, has received funding from the Asian Development Bank to set up a new mobile phone network in PNG. While it was supposed to start offering services last year, either as Vodafone or Digitec, it has yet to do so. The PNG offering would complement its mobile networks in American Samoa, Cook Islands, Fiji, Kiribati, Samoa and Vanuatu.
In September 2021, there were Telikom PNG outages in several parts of the country. PNG customers have reported internet outages and the inability to make voice calls. At the time, the telecommunications company admitted that voice calls had been interrupted for more than half a day in the capital Port Moresby. Earlier this year, a main power cable was brought down by disgruntled villagers in Chimbu province, causing power and internet blackouts across much of the highland region.
At the same time, the merger of Telikom PNG and bmobile continues. Although earlier scheduled completion dates have passed, the merger is reportedly close to completion. The two companies continue to sell their products separately, although Telikom “Rait Kads” can now be used to add credit to bmobile devices and bmobile “Top Kads” work on Telikom devices. The ICCC approved the merger in 2018. In addition, the government is considering the partial privatization of Telikom PNG, announcing the possible interest of two large pension funds.
Although there are many happenings in the telecom industry in PNG, the main thing consumers want is reliable and affordable services. Over the past two years, despite assurances that internet prices would drop, smartphone users have seen no real change in mobile internet data prices. We will be interested to know if the developments discussed here – the sale of Digicel, the entry of ATH and the Telikom PNG/bmobile merger – have an impact on prices.
This research was funded by the Pacific Research Program, with funding from the Department of Foreign Affairs and Trade. The views represent those of the authors only.