Information and communications technology (ICT) reform in Papua New Guinea is not only delivering cheaper prices and stronger competition: it is also helping businesses devise a new generation of innovative services.

Telecommunications companies’ marketing activities in PNG involve regular forays into remoter communities. Credit: Bemobile

As most companies that do business there will tell you, while it can be very rewarding, Papua New Guinea is a demanding environment in which to do business. One of the reasons for this is undoubtedly its infrastructure, which has struggled to keep pace with the country’s needs in recent years.

In the past five years, however, one area of infrastructure in particular has made significant progress—information and communications technology (ICT).

From 2007, when Irish-owned Digicel aggressively entered the local mobile market, the sector has experienced the benefits of increased competition. Prices have fallen for mobile calls, reliability has improved markedly and the mobile networks themselves have expanded to cover over 75% of the country’s population—quite some feat in a country with a population as widely distributed as PNG’s.

Some estimates suggest that more than 1.5 million Papua New Guineans—perhaps 25% of the population—now have mobile phones, compared to just 65,000 fixed line subscribers.

Opening up the sector

The latest stage of the ICT reform process occurred in 2010, with the passing of a new ICT Act, the creation of a new industry regulator (NICTA—the National Information and Communication Technology Authority) and the commencement of a new regulatory regime on 1 November 2010.

The new regime is designed to remove Telikom PNG’s remaining monopolies in fixed line and broadband services and encourage greater competition, as Paul Tevlone, Acting Chief Executive Officer at Telikom PNG, tells Business Advantage: ‘The major change in the policy is that the retail market will be deregulated and opened up, and the market itself will dictate pricing.’

John Mangos, Chief Executive Officer of Digicel (PNG) Limited, explains what this means for Telikom’s competitors: ‘It effectively means that someone like Digicel will migrate our licence from a mobile-only licence to looking at all telecommunication services. It has created a broader, more level playing-field, not just for ourselves but for anybody coming into the market.’

Information and communications technology (ICT) reform in PNG is not only delivering cheaper prices and stronger competition: it is also helping businesses devise a new generation of innovative services. Digicel has already made its first move to broaden its offering by acquiring specialist telecommunications systems integrator and internet service provider Data Nets Limited, which has operations in PNG and Fiji.

Rising to the PNG challenge

For ICT companies, PNG presents several challenges for service delivery. ‘From our standpoint logistics are an enormous challenge,’ notes Stuart Kelly, Chief Executive Officer of Bemobile. ‘The cost of internal travel is high, so if you’re sending people goods—in our case handsets or cards—that is quite significant. Power is still a challenge, but it’s getting a lot better and the remoteness and topography of the land are also a challenge.’

Not that they can’t be overcome. In fact, the very nature of PNG’s exacting environment has driven innovation. ‘If you throw in the technology, which is going in leaps and bounds, it is the player who takes the initiative to look at new, innovative strategies and ideas who will obviously have the advantage,’ asserts Telikom’s Paul Tevlone.

The services initially deployed by the telcos themselves to keep their own customer service operations cost-effective in such a demanding environment—mobile credit and balance checking, for example—are now being offered to external parties in a range of sectors. Retail customers of state utility PNG Power, for instance, can now pay for their electricity by mobile phone when their electricity meter runs out in the middle of the night (all power in PNG is prepaid). Members of the country’s main superannuation funds, NASFUND and Namabawan Super, and of the Teachers Savings and Loan Society credit union can now check their balances by SMS. Mobile banking is one development currently under way, with the country’s largest bank, BSP, expecting to launch a mobile ‘e-account’ in mid-2011, to complement its rural banking initiative, and a new internet banking service. Mobile technology could well deliver new services in the insurance sector too.

Rising data usage

Such services are easy for the consumer to access using a basic handset and cost-effective to deliver—critical factors in PNG’s operating environment. All three telcos have business development teams working hard with the business community to further proliferate mobile-delivered services. ‘When you talk to corporate customers, they’re not talking voice services anymore, they’re talking data services,’ says Paul Tevlone.

One measure of just how much Papua New Guineans have embraced this new way of conducting their daily transactions is to consider the dramatic rise in data usage. ‘We’ve doubled our data usage in the last three months and that’s purely because it’s available to everyone,’ Bemobile’s Stuart Kelly told Business Advantage in February 2011. My view of the internet in PNG is that it’ll be successful through mobile phones.’

A national broadband network

Notwithstanding the popularity among consumers of handset-delivered data services, business is crying out for faster, more reliable and cheaper broadband internet.

The PNG Government has announced its intention to buy into the high-speed fibre-optic cable network being created to support the ExxonMobil-led PNG LNG gas project, creating in the process a national broadband network. The Government’s US$60 million investment through the Independent Public Business Corporation (which manages PNG’s state-owned enterprises) is likely to see the PNG LNG network integrated with existing broadband infrastructure run by Telikom PNG and PNG Power, together with the laying of new fibreoptic cable.

‘The ability to piggy back on the PNG LNG project has provided this country with an ideal opportunity to implement a national broadband strategy at a substantially lower cost than would otherwise be possible,’ announced State Enterprises Minister Arthur Somare in December 2010.

If all goes according to plan, the new network could be delivering high-speed internet services as early as the end of 2012.

Increased demand for IT services

The rise in demand for data services in PNG has been accompanied by a parallel demand for greater reliability and quality in IT services, driven in no small part by the major resource projects currently under way in the country. Companies like Remington, Datec and Daltron are all IT service providers with offerings that range from computer hardware through to complex IT services and training.

‘There was a bit of a lag, but we started to see opportunities arising from the [ExxonMobil-led] PNG LNG Project from the last quarter of 2010 onwards,’ says David Macindoe, Commercial Manager with Steamships Trading Company, which owns Datec, also the country’s largest internet service provider. ‘There are now expectations for serious service delivery, with more systems analysts and systems engineers needed.

With IT services companies such as Australia’s MCR and Allcom PNG entering the market in recent years, Macindoe is anticipating a more competitive sector in future.

In addition to IT services, Remington also supplies satellite phone technology—a essential service for mining companies working in remote areas. ‘Mining companies need to be able to set up communications wherever they are. Increasingly, we’re dealing with small companies in isolated areas which are not serviced by Telikom,’ notes Ken Harvey, Managing Director of the LBJ Group of Companies, which owns Remington. Over the whole business, Harvey reports growth of between 15% and 25% per annum over the past three years. ‘As more people are pressing buttons, we’re doing better,’ he says with a smile.

Open to all comers

While one might characterise what is happening in PNG’s ICT sector as an evolution rather than a revolution, there is no doubt that the market is growing strongly, and is likely to continue to do so as PNG’s economy expands.

‘The market’s open … more and more people are going to be looking at PNG and asking “How do I get involved in the marketplace? What can we deliver?”,’ says John Mangos. ‘I think you will see a lot more people deciding to compete in the market.’