Special Telecom Section
Fiji
The Costs of Monopoly
Fiji is currently grappling with the monopolistic nature of its telecommunications industry. The monopoly, caused by an exclusive license, is costing the country participation in telecommunication advances and, consequently, millions of dollars in prospective revenues from enterprises such as call centers.
While the pride of Amalgamated Telecom Holdings has been its profits over the last three years, ATH customers bombard the media with complaints over services provided by the group of companies that comprise the industry—all owned by ATH.
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Fiji, experts say, has missed out on investments because of its high telecommunications costs. And, typical of a monopoly, consumers are paying high costs for poor services.
The government reasons that all this is part of development. ATH was established in 1998, a consolidation of Telecom Fiji (in which the government has 100 percent ownership); Internet Services Fiji Limited (also 100 percent); Vodafone Fiji Limited (51 percent); and Fiji Directors Limited (90 percent).
Government currently owns 34.6 percent of ATH and 58.2 percent of the The Fiji National Provident Fund.
The most recent mention of the monopoly in Parliament was through a motion by the opposition majority Fiji Labour Party demanding a review of telecom policies.
Despite assurances to Pacific Magazine by Commerce, Business Development and Investment Minister Tom Vuetilovoni that ATH is not afraid of competition, company reports reflect a real concern that competition introduced now could be fatal for ATH.
University of the South Pacific-based Professor Ron Duncan says Fiji has lost the “backroom” opportunity because of its high telecommunications rates. Fiji’s time difference coupled with its educated workforce and its easy accessibility to the Southern Cross optical fiber cable link could have been a lethal combination for potential competitors in call center business. But telecom in Fiji is now locked into a protectionist exclusive license agreement that will allow the monopoly to go on another 15 years.
In response to Duncan, Vuetilovoni says, “We will just have to live with the costs for now until the changes come along.” He admits cheaper telecommunications “would be good,” and he acknowledges the concerns that are publicly and privately expressed. But Vuetilovoni is convinced telecommunication costs are not a significant factor for potential investors.
Minister of Finance Ratu Jone Kubuabola, presenting his 2004 budget in November, said the new Bill would cover “pricing, competition and access.” Government would rather ensure telephone access to Fiji’s rural population first before any major changes. Suggestions of a buy-out have been brushed aside.
In 2003, ATH made another record consolidated net earnings of $42 million, up 27.8 percent from the previous year.
Another element blocking change is the fact that any failure by ATH poses a risk to Fiji’s national superannuation fund. Yet critics like Ron Duncan say the exclusive license has only further marginalized the country. Telecom innovators in Fiji think government should concentrate on creating a sustainable environment for future investment and business should be left to the private sector where there is little bureaucracy and lots of capital and business acumen.
