New Age Tech, Iron Age Tariffs

If Cook Islands prime minister Dr Robert Woonton did what is wanted by European officials and their corporate lobbyists, he may not be speaking on the phone from Manihiki.

There might be no phone at all.

Manihiki is the pearl growing capital of the Cooks, 1,200 kilometres north of the country's political capital, Rarotonga. Woonton is there to welcome New Zealand Governor General Dame Sylvia Cartwright to the northern group on a state visit.

And, on this morning, answering questions from Islands Business about round two of the Economic Partnership Arrangement with the European Union. It's an arrangement that attempts to marry developing nations' lust for oodles of aid money with first world appetite for free access to developing markets. Telecommunications strike at the heart of that marriage proposal. Like many islands nations, the Cooks has already tried both free market and state monopoly approaches to the industry.

Which one is better?

"Ah, I can't make any comment on that," says Woonton, about comparisons between the former Cable & Wireless operation and its state-owned successor, Telecom Cook Islands Ltd.

"But for the first time, we have email connections to all our islands. We definitely have a lot better telecommunications systems than it was three to four months ago."

Cable & Wireless was legislated out of existence 12 years ago in 1991. The British telco had previously refused government requests to develop outer islands telecommunications, even in the face of a nascent pearl industry at Manihiki, saying they lacked viability. That year, members of parliament in the Cook Islands agreed that national infrastructure needs were more important than any damage to the country's international reputation, and removed Cable & Wireless from the scene. Their legislative efforts led to a compensation of NZ$8 million being paid‹and the establishment of Telecom Cook Islands Ltd (TCI).

TCI has enjoyed being a state- backed monopoly ever since. Not a situation that looks like changing any time soon, despite hopes within the European Union that trade liberalisation will lead to voluntary withdrawal of the state from private sector areas like telecommunications.

"The monopoly arrangement expires in 2006," says Woonton about the government contract with TCI Ltd.

And what will happen then?

"It's early stages yet but there are ... pros and cons," he says carefully, adding, for good effect, "both negative and positive. We have to give it a lot more consideration and perhaps negotiate with our own Telecom to give us a cheaper means of telecommunications."

It's not just being able to answer media queries from remote atolls. Woonton says it would be easy for start-up telcos to offer services cheaper than state monopolies, but, he seems to suggest, they might also be nasty. "You may have the best equipment in the world but if you don't have any agreements you cannot connect with anyone else."

He says Telecom Cook Islands is an example of a state monopoly that has built up links and agreements with a comprehensive range of suppliers overseas, a range any start-up would find hard to match, let alone beat. Woonton nonetheless remains positive about the benefits for the Cook Islands of the economic partnership arrangement with the European Union.

"Absolutely. Even though we have limited trade with EU partners, we do have pearls and fish products, and this will give us preferential exemptions." After making such a solid tackle on Cable & Wireless, Woonton sees less of an upfront role for members of parliament in the EPA process. He sees MPs tidying up the loose ends from the supposedly level playing field of international trade negotiations.

"It could formalise that," Woonton says of the EPA process. "Our trade laws should be put in place to protect not only the consumers but also introduce anti-competitive regulations to give everyone a fair go."

Debate over the EPA provides the background for other regional initiatives, like the one being promoted out of French Polynesia for the development of cable-based telecommunications to improve services to the region. For his part, Woonton points to cable costs, estimated at some NZ$1 billion. Even just equipping the 12 inhabited islands of the Cook Islands with cables would cost up to NZ$40 million.

Details of the Papeete proposal are sketchy, but few FINTEL customers in Fiji would sing praises of cables. Squeezed through copper lines to the home and many offices, the information superhighway seems as slow as a newspaper delivered by dusty horseback.

For the European Union, however, Cooks officials say the value of the region does not lie in the thickness or otherwise of our cables. Digital mobile sales in the region, for example, are barely enough to break a sweat on the Vodafone lunch account. Our value lies in our votes on the international tables of diplomacy and trade negotiation. Similar strengths, and weaknesses, become apparent when the EPA is looked at from the islands point of view.

Says Woonton: "It's not a matter of our parliament approving it. It's the region. We are in the ACP Pacific group and it is the consensus of ministers and officials to decide what happens."

Cook Islanders, he admits, "have very little to trade. But when you talk about Papua New Guinea, there is a thousand different products‹that's when it gets into real difficulties and, to a lesser extent, Fiji."

It is the latter country Woonton sees as having centrefield when it comes to questions about the role civil societies have to play in EPA negotiations. "The NGOs are very active, especially in Fiji. In our own civil society, they can go through government here, or the NGOs in Fiji where they can establish their resources."

After four days on Manihiki, Woonton was to sail south, aboard Royal New Zealand Navy frigate Te Mana.

It was a charmingly old-fashioned way to return to Rarotonga, a week or so before Telecom Cooks Islands switched the island from analog mobile phones to GSM cellular. By then, Woonton should have lost any sea leg wobbles. Balancing the demand for new age tech with iron age protection against modern free markets will also need careful footwork.