Focus on internet costs a good cause


A STUDY put out this week by the Papua New Guinea National Research Institute on the high cost of web access in the country is timely.
As PNG continues its transition into the digital/cyber age, one of the key factors that will drive development and enable Papua New Guineans to engage with the rest of the world is affordable access to the World Wide Web.
It is already evident that most transactions in the community whether it be in business, public service, education, health, transport, construction, service delivery of one sort or another relies partially or significantly on their ability to communicate and exchange information over this medium.
The study was titled Why internet prices are so high in Papua New Guinea, while the occasion was also used to launch the new PNG NRI website.
Internet use in PNG spiked after the arrival of mobile operator Digicel in 2008 and this in turn has seen more and more people gain relatively cheap and practical access to the web via their mobile phones.
Social media sites such as facebook, Twitter and Instagram are now easily accessible to the general population from the primary school student in Port Moresby to the coffee farmer in Jiwaka or the oil rig worker in Gulf to fisherman in the New Guinea Islands – thanks to technology Papua New Guineans are tapping into the internet to their advantage.
But the study’s main focus is more on weighing the cost of the service on businesses and state bodies who account for a large portion of the usage pie.
According to the study: “In 2013, the International Telecommunications Union (ITU) ranked PNG’s internet affordability at 163rd out of 169 countries, with an entry level fixed broadband package estimated to cost 266 pre cent of gross national income (GNI) per capita.
“Since that time, internet prices have fallen markedly – in 2014 Nicta estimated that the price of a 1GB package ranged from around 20-80 per cent of GNI per capita, while current estimates suggest a 1GB package can be obtained for around 10 per cent of GNI per capita.
“These dramatic price reductions are likely to be driven by a number of factors, including reductions in the wholesale price (which has fallen by around 70 per cent over that time), and increased competition in the retail market.”
These figures may seem to have plateaued over a short space of time but internet access is still a major expenditure for most companies.
The study points out that the reasons for high cost of internet usage in this country are varied but valid.
The range of reasons span five broad categories: infrastructure; wholesale; regulation; retail and competition; and PNG specific issues.
Many consumers in the country have clamoured over the years for cheaper rates on par with what is offered around the world but what they do not fully appreciate is that doing any kind of business in PNG is laced with challenges one of which is the cost of importing equipment and maintaining the technology to enable net access nationwide.
In terms of the wholesale factor for internet access the report gives the example that Telikom, the country’s nationally-owned telecommunications venture, pays approximately A$30 (K72) per megabit per second (A$30/mbps) to TPG (the owner of the PPC-1 cable) for bandwidth, then on-sells this bandwidth at a rate of K1,950/mbps, or approximately A$800/mbps.
While the spot price of bandwidth appears comparatively low to the wholesale price passed on to Internet Service Providers (ISPs), it is noted that Telikom faces a range of costs in providing wholesale internet services including costs for operating the cable, maintenance, electricity, and various staff and overhead costs.
Those costs transferred to the consumer in PNG means people here have no choice but to pay high premiums for the privilege of access.
Can the situation be changed for the better?
The study concluded that reducing wholesale rates, shoreing up regulation and reforming the retail market coupled with the marked improvement in infrastructure and better control of pricing as well as the encouragement of competition would have a positive and desirable effect on internet access.
PNG’s economy is said to be on an upward trajectory but for all that progress and positivity the country could be so much better positioned if impediments to internet access were lifted.

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