High internet cost due to small market

Business, Normal

The National, Thursday 2nd May 2013


THE cost issue which internet services providers in PNG face comes back to the basics of the factors influencing the price of a product in any business, communications engineer Noel Mobiha, says.

Some factors which can influence PNG internet costs are:

l PNG’s market is small compared to Bangladesh, India, African nations or neighbouring Southeast Asian nations;

l The starting price that Telikom pays to offshore upstream providers sets the basis of its wholesale tariff for the providers which in turn affects the retail price to an end user;

l There is no government policy on internet subsidy as a growth strategy for developing an intelligent future generation and setting an environment to facilitate and sustain the growth in the information era;

l At this point in the country’s development, PNG is a small market and has a trying environment for investment. It will continue to have high transmission cost in microwave links, satellite and fibre optic cables for access to and distribution of internet services until some critical volume in user-base is reached; and

l Internet is not classed as a basic necessity by the government and therefore its pricing is not brought under regulation by the Independent Consumer and Competition Commission but is market-driven. 

“The cost of doing business is very high in PNG, which is detrimental to the realisation of PNG Vision 2050 through the implementation of the PNG National Development Plan 2010-30 and the Medium Term Development Plan 2010-15.   

“For internet access, the cost must go down if PNG is to become a player and ride the information wave of the new era like other nations have and are doing,” he said.

Mobiha told The National that governments, businesses and individuals relied on information collected, stored, analysed and disseminated through the internet to enable them to make more informed decisions to improve their businesses, safety and security.   

He said Telikom’s recent announcement of reducing the internet wholesale price from nine toea to three toea was not the only solution to the costs issues.

“What we need to do is to take a paradigm shift in addressing the issue of internet accessibility nationwide on a grand scale,” Mobiha said.