Telecommunications wholesaler PNG DataCo Limited has been set up as part of a restructure of Papua New Guinea’s telecommunications industry. Business Advantage PNG discusses its critical role with its Chairman Reuben Kautu, an entrepreneur with a strong background of commercial and strategic management, developed during roles with BP, ExxonMobil and, more recently, Telikom PNG’s subsidiary Kalang Advertising Limited.

PNG DataCo’s Reuben Kautu

Business Advantage PNG (BAPNG): What is the role of PNG DataCo?

Reuben Kautu (RK): DataCo is an initiative of the government to restructure the current telecommunications assets to provide wholesale-only infrastructure and telecommunication services to retailers, who will then on-sell to end users.

The underlying objective of the government is to push competition across the retail telecommunications sector by upgrading, building, owning and operating the National Transmission Network (NTN) and making it available to ICT operators at the wholesale level only.  This will eventually provide an effective wholesale infrastructure that is reliable and cost-effective for the people of PNG. Telecommunications prices are set to reduce substantially once all these changes are in place.

The country is faced with vertically integrated structure currently under Telikom PNG that has its disadvantages in a competitive and changing environment. The new structure supports rationalising government investment in the costly wholesale infrastructure while allowing greater competition in the retail segment of the market, thus offering choice to the business community and the entire population. Information is the key for everyone and for the development of this country.

‘The Government … has already announced for PNG DataCo to partner with Interchange Limited to build ICN-2 cable, or the Melanesian Cable, from Port Moresby to Vanuatu via Solomon Islands.’

The structure going forward is that DataCo will be the wholesale infrastructure and capacity provider, including capacity on submarine cables, satellites and microwave. It will take one-to-three years to make the Government’s vision a reality, although some services can be transferred immediately, such as international submarine cables and other domestic cable assets.

BAPNG: What is happening with PNG’s fibre optic broadband network?

RK: We (DataCo) have now commenced work to connect the fibre optic broadband link from Hides to Port Moresby built by the developers of the PNG LNG project to Lae and Madang via Yonki, Kainantu, Goroka, Kundiawa, Kudjip, Mt. Hagen, Mendi, Wabag and Tari. DataCo also has plans to extend fibre connectivity to Wewak and Vanimo and to the New Guinea islands as well.

BAPNG: What are your options with the ageing submarine cable between Port Moresby and Sydney?

RK: The APNG-2 cable has served its time and is currently operating at 80% of its available capacity.

Since the inception of DataCo, this issue became a real concern that needs to be addressed immediately. We understand the need to replace the existing cable to Sydney. We’re faced with two options in the route we take to build, considering the length of the route, the dollars required to invest and the availability of funds.

The routes considered were either: to build a new cable connecting to Sydney replacing the existing cable or to partner with our Melanesian neighbours Vanuatu and Solomon to provide a cost effective solution to meet our international cable needs. Both were commercially viable options and my role was to provide these options to the government to consider and make the final decision. The government will obviously consider other benefits that are associated with each option.

There is also already PPC-1 cable, which runs from Madang to Guam and Madang to Sydney, which is currently under utilised, even though Telikom PNG had to buy capacity up front for a period of 15 years, of which only 10 years remain. The issue of under utilisation can be addressed by providing national connectivity to Madang, of which connectivity to Lae and Port Moresby is critical, as bulk of the international traffic and internet data is generated in or intended to be terminated in this main centres.

With DataCo’s creation, we are now working to connect and provide a complete loop from Madang right through the highlands down via the PNG LNG fibre optic cable to connect to Port Moreby. This link will ensure that this traffic or internet data can be re-routed to Madang and out, increasing the utilisation on the PPC-1 Cable.

BAPNG: When do you expect a decision to be made on the replacement submarine cable?

RK: The Government, through the Minister for Public Enterprise and State Investments, has already announced for PNG DataCo to partner with Interchange Limited to build ICN-2 cable, or the Melanesian Cable, from Port Moresby to Vanuatu via Solomon Islands.

‘With the restructure of the SOE’s providing ICT services and their infrastructure assets, I believe we can eliminate the duplications and take advantage of the synergies’

The contract with the vendor has already been signed and the partnership deal is awaiting preconditions to be met by the end of January 2015 before the project starts.  This partnership is strategic for PNG, as it brings other commercial benefits to PNG state-owned entities and private enterprises to expand their services (banking, airlines, insurance and tourism services) to our Melanesian neighbours. This cable, once completed, will offer substantial reductions in wholesale pricing, so we expect this reduction to be passed on to the end users by the ICT retail service providers.

BAPNG:  So what is the future of the Guam link? What role will it have in PNG’s future telecommunications infrastructure?

RK: Connecting to Guam is a critical link for PNG as it provides redundancy and diversity. This link provides the PNG telcos with the choice or option to negotiate international termination rates or IP transit arrangements with international carriers up north. It also provides the connectivity to US and Asia through Guam.

BAPNG: There appears to be a lot of duplication of infrastructure in the telecommunications field. How are you intending to minimise that?

RK: What Digicel is doing is similar to what Telikom has been doing up until now. We are building the infrastructure and we are encouraging and inviting the retailers like Telikom, bemobile, Digicel, and other ISPs to come on board. They have a choice to build their own infrastructure in some areas but we are determined to provide international and domestic capacity services at competitive rates.

It is a numbers game and, with the mergers and acquisitions happening in the ICT market in PNG, the government has now decided to rationalise and restructure its critical assets parked under various SOE’s and organizations. DataCo has been formed with this plan to take on wholesale assets and provide non-discriminatory and innovative appropriate wholesale only services. This effort should then minimize the duplications in the wholesale infrastructure and drive up the utilisation of this wholesale infrastructure and, in turn, reducing the unit cost of building and running such wholesale infrastructures.

BAPNG: How would you describe the telecommunications system in PNG, once the new structure is in place?

RK: With the restructure of the SOE’s providing ICT services and their infrastructure assets, I believe we can eliminate the duplications and take advantage of the synergies that we have to address the Government’s policy objectives around access to all at affordable prices for the people of PNG and the business community.