Minister has lost touch with reality


I HAVE listened, watched and read with interest the recent developments relating to mobile competition and Minister Arthur Somare’s arguments for his ICT policy and why it should be adopted. Somare has advocated for the adoption of the ICT policy, the revocation of Digicel and Green Communications mobile licences including the stripping of the ICCC’s licensing powers in the industry.
Firstly, from international experience around the world (example the Philippines and Malaysia), suggests that when competition is introduced, the incumbent carrier’s revenue and profitability increases.
Whilst some of the incumbent market’s share can be taken up by the new entrants, its revenue would increase because of the overall growth in the industry and the new opportunities that arises such as interconnection revenue.
In the current context, Telikom still has monopoly on fixed line and data services. It is also understood that one of the licensing conditions for the two new entrants require both entrants to use Telikom’s international gateway for their international services.
However, this would require interconnection and it appears Telikom has for some reasons, rejected or delayed the process. This means Telikom is missing out on interconnection revenue, which is really a self-inflicted predicament.
Therefore, to put the record straight, Somare and his advisers including IPBC should inform the public of any financial analysis or evidences they have which suggests that Telikom’s revenue would be depleted leading to its eventual demise.
However, international experience and anecdotal evidence in the industry elsewhere suggest otherwise.
Whilst we are not privy to information regarding the operations of Digicel, it is common knowledge that Digicel has been given the licence to provide public mobile communication services, and it is simply doing that. Since its commencement, prices have significantly decreased whilst the penetration rate of communication services, for the first time, has dramatically soared.
Available data suggests that for the last 51 years, the national penetration rate has been less than 2%. However, over the last three months, since the introduction of competition, penetration rate has increased to about 6% and is still increasing. So what is the minister’s point in trying to curtail this growth?
Digicel is not involved in the provision of broadband data services nor fixed line segment, so where did it encroach upon Telikom’s reserved rights?
International gateway appears not to be a reserved right of Telikom under the Act but through the licences issued. So Telikom must come to its senses and allow interconnection to stop this revenue haemorrhage.
Somare is basing his arguments on section 46 of the Act which relates to Telikom’s reserved rights. However, for a balanced view, section 48 as well as 16 of the Act needs to be considered. Section 48 allows licensed public mobile operators to carry communications between PNG and outside of PNG. There is no reference that they should carry it through Telikom’s gateway, therefore should Telikom reject interconnection; the mobile operators would need to access their own gateways to carry their international services. To restrict them would mean that the State would be in breach of the law and the licence.
Somare’s suggestion to remove the licensing powers from ICCC and have it vested with the minister for communications is not only an ill-conceived idea but a retrograde step that would take the industry backwards. It is common practise elsewhere for licensing authorities to be independent and be seen to be independent of political influences and that any decision should be reviewed (if necessary) through a separate independent check and balance mechanism that is free of political influence.
The proposal to remove these powers from ICCC is unbelievable and the good minister must have been incredibly ill advised or blatantly ignorant of the long term repercussions in the industry.
It is therefore imperative that the minister, if he wants to remove these licensing powers, to inform the public as to why and more particularly where the ICCC has abused, misused or manipulated its licensing powers during the licensing process of the two new entrants and whether the process was conducted in a manner than can be considered as fair and transparent by a reasonable person.
The minister needs to provide evidence that would vindicate this move because it sure smells fishy.
The reason relating to the ICCC not informing the Government or Telikom is insufficient to be a valid reason because Telikom should have been aware that there was a Government decision to introduce mobile competition in late 2005 for competition to be introduced in October 2007 or anytime earlier. Telikom then consented to an early ending of its mobile monopoly, which was upheld by an independent arbitration panel and the courts on two separate occasions when Telikom contested otherwise.
Therefore, it is only appropriate that Telikom should have gotten its house in order to compete. It should have built up its network capacity to provide interconnection including backhaul, kiosk and leased line services to the newcomers and other customers, which would result in significant revenues than instigating frivolous lawsuits with the intention to delay and frustrate the new competitors and are at best an abuse of the court process.
In terms of informing the Government, it would appear that the ICCC is not subjected to directions from the Government or the minister responsible for treasury matters but it reports to the treasurer. Certainly for such a major decision such as the issuance of mobile licences, the treasurer would in all likelihood, be briefed accordingly.
One would have thought that the treasurer would have informed the Government. But the point to note is that, the ICCC under the current legal framework in the industry has the power to issue licences and not the Government. The Government at that time made a decision and ICCC implemented it.
If Somare is not satisfied with the process, then that process should be put under the microscope and abnormalities identified which may justify his attempts for the transferring of the licensing power to politicians. Otherwise just leave the current status alone.
In summary, given the benefits that ordinary Papua New Guineans have experienced in recent time since the introduction of competition, it would be totally insane for Minister Somare to nationalise the industry, vest licensing powers with politicians (a recipe for corruption) and revoke licences issued to the two new operators which would cost the State, let alone the ordinary taxpayers of this country, billions of kina in damages.
We have people who are dying of curable diseases whilst our education and infrastructure systems need massive financial injections, hence we cannot afford to pay damages just because of a minister’s pride and arrogance, let alone foolishness. It looks like Minister Somare has lost touch with reality in this country.

George Kuno
Port Moresby