Hopes are high in Papua New Guinea’s telecommunications industry that internet services are finally about to become more accessible and more affordable.

‘Mobile phone usage stands at 27.8% of the population, but internet penetration is only 1.3%, with cost the main issue,’ lamented Managing Partner of Deloitte PNG Lutz Heim at the Papua New Guinea Advantage Investment Summit in September 2012. ‘At our office in the Port Moresby’s CBD, 200 gigabytes a month costs US$15,000 (31,400 kina), whereas at my home in Australia I pay A$80 (US$83 or 175 kina) for 500 gigabytes.’

The main reason for these wild discrepancies is that, while the mobile phone sector in PNG has benefited from deregulation, internet thus far has not. As a result, Telikom PNG has retained an effective monopoly on international access, leaving it free to charge whatever it pleases to local internet service providers (ISPs) and its own customers.

Prices down, speeds up

This is finally changing, though, and a dozen ISPs have now applied for their own Individual Network (Gateway Service) Licenses. With competition imminent, there is also pressure on Telikom to reduce its own prices:

‘It’s our absolute priority to get prices down and speeds up this year,’ newly-appointed Chairman of Telikom PNG, Mahesh Patel, told Business Advantage PNG last week.

If deregulation alone can bring prices down, significantly improving speeds will require tangible capital expenditure, however.

‘Even though most customers can use wireless internet services, you still need fibre in the towns and fibre between the towns,’ explains John Mangos, Chief Executive Officer of telecommunications company Digicel PNG.

National transmission network

In recognition of this, PNG’s new Government announced a major project to upgrade PNG’s telecommunications backbone shortly after taking office last year. At a cost of 500 million kina (US$239 million), the National Transmission Network (NTN) ‘is essentially an integrated optical fibre network, to be controlled by a new company called PNG DataCo Limited,’ according to Thomas Abe, Managing Director of the Independent Public Business Corporation, the government agency responsible for its implementation.

DataCo will own and operate the network as a wholesale provider of telecommunications, with Telikom PNG to be restructured into a retail-focused service provider.

‘The aim with the network plan is to avoid duplication of backbone network transmission and to allow retail service providers to concentrate on services to the people rather than building and maintaining expensive backbone networks,’ says Sundar Ramamurthy, a consultant on the project (and original founder of IT services company DataNets, now owned by Digicel). ‘Consumers should see the benefits of lower prices and better access by mid-2014, although everyone should keep in mind that rolling fibre across PNG does pose a non-trivial engineering challenge.’

Indeed, the first stage of the NTN, a new fibre-optic link from Madang to Lae, does not appear to have made much impact so far, in Lae at least: ‘I believe there have been technical issues and our members are frustrated,’ reports Alan McLay, President of Lae Chamber of Commerce and Industry.

Unstoppable momentum

Nonetheless, the process does seem to have gained unstoppable momentum and Digicel’s John Mangos is convinced broadband’s time has finally come in PNG:

‘We think that in the next twelve months there’ll be quite a boom in broadband, quite a boom in business connectivity. If the Government wants to get a million people on broadband over the next two years, then we can help them achieve it.’

Given the leading role played by Digicel in the exponential growth of PNG’s mobile phone sector over the past five years, few would disagree.

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