Is ‘Big Deal’ Going Down?

The 26th annual Pacific Telecommunications Conference in January, held as usual in Honolulu, Hawaii, brought together powerhouse information and communication technology companies from across Asia, the Pacific and the U.S., to broker deals and discuss looming issues: The economic recovery of the global telecommunications industry, the emergence of broadband and wireless network capabilities, an incessant rise in security vulnerabilities. But while high-powered CEOs discussed the potential for economic growth in the Asia-Pacific region, representatives from two small island nations were working their own deal.

Telecommunication corporations in both the Federated States of Micronesia and the Republic of the Marshall Islands spent much of the PTC conference in bilateral meetings. A potential agreement involving the FSM and RMI proposes to run 2,175 miles of fiber-optic, submarine cable from Guam to Pohnpei, Kwajalein and Majuro-a digital network that promises high-speed, low-cost connectivity, bridging the digital divide and linking some of the most remote areas of the Pacific to the rest of the world.

FSM Telecommunications Corporation (FSMTC) General Manager Takuro Akinaga is convinced the project will be realized. "Preliminary cost estimates for the FSM were prepared as early as 2002, on-island surveys were conducted in 2003, and we've received approval from FSM Congress to borrow $20 million," he says. "We're moving forward at this time confident the project will see great success."

Proposed Ocean Cable Route through FSM and RMI

Yet closure of the $67.4 million deal is dependent upon a three-party partnership agreement between FSMTC, Marshall Islands National Telecommunications Authority (MINTA), and the U.S. Army Kwajalein Atoll Ronald Reagan Test Site (USAKA). While both FSMTC and MINTA have applied to the U.S. Department of Agriculture's Rural Utilities Service for loans, USAKA is considering several funding options, one of them being a lease agreement with MINTA.

Several of the stakeholder meetings in Hawaii included Tyco Telecommunications, Ltd., the largest supplier of ocean cable in the world, to discuss the status of the project and firm up a potential schedule. Additional meetings were held with representatives of the U.S. military to consider possible levels of USAKA involvement in a final agreement. While no binding commitments were made in Hawaii, an important, all-participant meeting has been scheduled for early March to review final network requirements and military participation.

If an agreement is signed at that time, Tyco will begin construction immediately on cable stations in Pohnpei, Majuro and Kwajalein. Marine cable will be simultaneously "prepped" at Tyco factories and eventually deployed. The overall process is expected to take about 18 months, possibly making the system fully functional by mid-2005.

Switching from satellite to direct, fiber-optic connectivity will allow FSMTC and MINTA significantly more bandwidth and access to full point-to-point circuits. Currently, the industry standard of one full circuit at 155 mb/s would cost FSMTC $3 million annually by satellite. That same circuit run through a fiber-optic cable will cost a fraction of that-$82,560. The cable will reduce bandwidth costs from $42,805 per mb/s, to $553 per mb/s, and that discount, authority officials say, will be passed along to consumers.

"One way or another our rates will continue to diminish, and this is in sync with the rest of the telecommunications market," says John Sohl, Deputy General Manager of FSMTC.

Moreover, the benefits of fiber will be realized in all states of the FSM-not just Pohnpei. Currently, an international satellite phone call from Chuuk, Kosrae or Yap must first connect to the Pohnpei switch by satellite and then be routed to its destination through a second series of satellite links. As Sohl explains, under the new system these other places "will be able to access Internet and telephone services through a single satellite link to Pohnpei. By switching to fiber and avoiding satellite time, we will be increasing the quality of communications while decreasing the cost, and that presents an ideal situation."

Another benefit of the deal is Pacific Island countries working together to achieve major accomplishments. While high-bandwidth connectivity will surely make an impact on health and education, the FSM and RMI will have successfully attained a level of regional collaboration that is all too rare in the Pacific, and that is no simple feat.