The CEO of Telikom PNG predicts all Papua New Guinea will be able to connect to the Internet within two years. In a wide-ranging review of PNG’s telecommunications industry, Michael Donnelly canvasses lower prices, new investment, takeovers and the impact of competition policy.

Telikom’s Michael Donnelly

Within two years, 100 per cent of Papua New Guineans will have access to modern communications technologies, including the Internet, as a result of a concerted effort to ensure everyone has access to stable, reliable, effective telecommunications, says Telikom PNG’s CEO, Michael Donnelly.

Today, he said, about 85 to 90 per cent of the geography of the country is covered or has the capacity to connect to the Internet either by a mobile or fixed line network or some sort of wireless solution.

But that is increasing, he said, pointing out the World Bank has let a tender for blackspots in those areas where there is no coverage and also to enable the upgraded ‘from 2G to 3G to 4G’ in some of those areas as well.

Competition policy

In conversation with Business Advantage International’s Publishing Director Andrew Wilkins, Donnelly told the 2015 PNG Advantage Investment Summit in Brisbane that competition policy is largely behind the move to connecting Papua New Guineans ‘to the modern world economy and the modern world of communications’.

‘In the last 18 months, we’ve reduced the wholesale price for data by about 60 per cent and the plan is to continue to drop that over the coming two to three years to get it to a point where we’re achieving international benchmarks.’

He acknowledged the entrance of competitor Digicel into the PNG market ‘has achieved enormous things’.

‘But it has also thrown the challenge to Telikom to re-look at its business, re-look at the agility of its business and the ability to respond to customer demands in terms of service levels, coverage levels and things like that.

‘I think the real innovation in competition policy is that the customer becomes the focus of your products and services as opposed to something else.’

He said convergent technology has seen customers asking for things ‘that are arriving on the shores of PNG not too far behind anywhere else in the world.’

Investments

Donnelly said that with ‘a very strong balance sheet’ and with the support of the Independent Public Business Corporation [the government entity which oversees PNG’s state-owned enterprises], Telikom had made some significant investments in the last 12-to-18 months.

‘We’ve acquired Datec, one of the country’s largest ICT providers and we also acquired EMTV*. Because what our customers, our corporate and retail customers are looking for is convergence.

‘With the large capital investments we’re making over the next 12–to-18 months, we’re going to be able to provide real competition and demand.’

‘Data and data storage is one of the big issues for small and medium sized enterprises because they can’t make those investments themselves hence out investment in a data centre,’ he said.

Telikom has signed an agreement with Australian Data Centres, a large provider of high-end data centres to the Australian government, which will build a new data centre in Port Moresby.

‘It’s a large investment and it is an example of how a state-owned enterprise can build an infrastructure, using best practice from overseas to the banking, mining or private sector to onshore its data.’

Lower prices

Lowering the cost of telecommuncations is related to coverage, said Donnelly.

‘As more and more users jump onto the infrastructure and more and more products and services make themselves available, whether it’s an e-commerce or an e-health or some other content, clearly prices will fall.

‘But, in the last 18 months, we’ve reduced the wholesale price for data by about 60 per cent and the plan is to continue to drop that over the coming two to three years to get it to a point where we’re achieving international benchmarks.

‘Our projections are that before 2018 the country will need and will have a new international submarine cable.’

Donnelly said recent talks with Digicel will see a new agreement covering interconnection and termination fees, which apply when a Telikom customer calls a Digicel mobile, and vice versa.

‘Those interconnection and termination are coming down and the benefit of that of course is that the real cost of telecoms is and will continue to fall.

‘But ultimately what’s going to drive the price down is connecting consumers, businesses and organisations to that network and then allowing more entrants to enter the market to really drive the prices down.

More operators

‘Personally I’m not afraid of competition.

‘I actually think there’s more room for operators,’ he said. ‘Probably not a lot of room for a third or fourth infrastructure build because the cost-benefit analysis is not there, but the infrastructure that we are building is open to other operators entering the market and bringing their unique services, whether it’s Netflix or another mobile operator.’

Connectivity

Telikom is not only building the National Broadband Network, but, working with PNG DataCo, it is looking at international connectivity.

Currently, two submarine cables come into the country; one is via Guam, the other via Sydney.

‘As we see the data increase and the usage increase every day for all sorts of purposes, so our projections are that before 2018 the country will need and will have a new international submarine cable,’ said Donnelly.

Priorities

While many in PNG complain about low connection speeds, Donnelly points out that operators have to concentrate initially on stability and connectivity because PNG has a challenging topology–high mountains, and a lot of land movement.

‘So, the focus initially for Telikom has been stability, reliability, robustness, and capacity. And then comes speed,’ he says.

‘By the time we complete the NBN with all the smarts we’re building into the network, he said, the speeds will be commensurate with other similar countries, ‘maybe not South Korea or Singapore. But if you want me to give you a number, I just won’t do that.’

Telikom will also spend about K26 million in 2016 in wi-fi and fibreoptics, laying additional fibre around the country.

‘We’ve got loops in most of the main commercial centres and what we’re doing now is connecting businesses to those fibreoptic loops, which connect to this new transmission network that we’re building across the country.’

Knowledge

In the last two years, Telikom has focussed on ‘knowledge management’.

Graduates are seconded to other telcos, such as Australia’s Telstra or Optus.

‘We’re probably the largest engineering business in PNG and through that we are doing research and development in terms of new products and services.

‘We have a lot of good technology partners, whether it’s Cisco or Siemens, GE, Huawei, where a part of those contracts is knowledge transfer.

‘So if you want to work with Telikom, you’ve also got to transfer knowledge.

‘We are very much focussed on building the intellectual capability of the company and then using that intellectual capability to partner with global providers to ensure we stay ahead of the curve.’

2018

‘Where we want to be in three year’s time is to be a key economic enabler in the country—whether it’s a small private user or a large user, they can use the infrastructure that we’re putting in place to develop their business.’

* While a deal to acquire EMTV was signed in February 2015, ‘intense negotiations’ were still ongoing between the parties at the end of August 2015, according to EMTV’s owner, Fiji TV.