Telecom
What options do islands countries have?
After the United States Federal Communications Commission (FCC) Benchmark Order in 1996 to reduce international accounting rates
After the United States Federal Communications Commission (FCC) Benchmark Order in 1996 to reduce international accounting rates, islands countries are faced with the challenge to reduce costs.
To remain economically viable some operators in the islands want to rebalance the domestic market to offset a loss in revenue, a strategy that will need government backing and good marketing.
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Restructuring business without causing a stir in the domestic scene will not be easy. Telecom Fiji Limited’s general manager (New Business) Taito Waradi explains that the economic viability of small islands nations with heavy United States trade links and high dependence on telecom-generated revenue will be rattled. Globalisation comes at a price. With rate reductions to begin this year, Waradi admits that the timing could not be more off, particularly when some countries are still grappling with providing basic POTS (plain old telephone services).
Fiji, for instance, with a teledensity of 10.5 percent, falls under that category. Therefore, Waradi insists that the FCC ruling be gradually implemented as Pacific Islands countries operate on unequal capacities from developed countries; unequal in the form of capital, skill and low-level telecommunication infrastructure.
Implementation of the FCC benchmarks could mean a $F10 million revenue loss to Fiji, a considerable sum considering the country’s annual telecom investment budget stands at about $F20 million. Need for tolerance is further highlighted through the shaky nature of island political and economic environments such as Fiji’s political upheaval and crises in Solomon Islands and Papua New Guinea.
Some islands countries have begun to think FCC. Maui Sanford, Tahiti’s Office des Postes et Telecommunications’ international relations manager, speaks on how French Polynesia is working towards maximising revenue.
A few years ago French Polynesia’s Office des Postes et Telecommuni-cations’ decided to diversify its activities. It began by concentrating on the provision of a mobile network, Internet services and the implementation of its Metu@ scheme. The Metu@ Project (see Metu@ report—page 32) or multimedia based on technologies for a universal access aims to enhance telecommunications services in French Polynesia and particularly remote locations of the territory.
Says Sanford: “We really think that the new revenues generated from these new services will subsidise most of the investments we will make to provide other technical infrastructures on our network to give access to everybody. “So we are confident in value-added services that will generate more profits for us and enhance the quality of services given to customers.”
Solomon Telecom’s manager international business Loyley Ngira says that the difficulty lies in balancing some of the issues confronting the company, what actions to take and what not to take. “Sometimes it’s difficult to progress changes in the services knowing pretty well that the market dictates what you can offer as those that you can have some return from what you invest in,” Ngira said.
He adds: “We are pursuing value-added services outside of the country that can generate revenue for us both in voice and IP services.
“Perhaps if the cost of some of these new solutions or new technologies could be reduced, it would also help us.”
Ngira also urged some of Solomon Islands’ traditional partners to reduce some of their long-term costs.
Telecom Fiji’s Winston Thompson says that the challenge is in trying to find the relevancy in what is there for islands countries. Thompson adds that the region needs some sympathy and understanding from some of their partners. Options for dealing with the FCC ruling have been put forward for small Pacific islands carriers to consider. A meeting held in November last year in Australia considered the following:
• Refile traffic originally intended for the United States. Repercussions include low quality service.
• Go to Benchmark then to Asymmetrical rates (calculations left to each country).
• Raise premium services, for instance, for mobiles.
• Request waiver from FCC (could be expensive and needs a United States lawyer).
• Remove directs and force refile.
• Use volume-based rates, for example first 10K minutes at Benchmark ($US0.19), second 10K minutes at $US0.10 minutes and rest of traffic at $US0.40.
• Restructure to reduce costs to provide the service.
