Industry player explains price

The country is expecting internet prices to be cheaper once PNG DataCo Ltd (DataCo) connects the domestic fibernetworks and the connection with Coral Sea Cable. However, infrastructure maintenance and vandalism remains a challenge for the ICT sector, which needs equal attention. Digitec ICT Ltd chief executive officer NIRMAL SINGH discusses with Business reporter PETER ESILA players in the information and communications technology (ICT) and internet service provider (ISP) sectors

Q: As one of the biggest internet service providers in PNG, how will the domestic cable and the Coral Sea Cable managed by DataCo impact the market in PNG?

NIRMAL: Basically, what we think is that the CS2 cable will improve the efficiency that we are currently not getting from the existing PPC1 (Pipe Pacific Cable) cable.
It has a lot more capacity that will provide good growth for the country as a whole.
I believe that the price will also come down but not to the level everyone is hoping.
There is some discussion going on between DataCo and Nicta (National Information and Communication Technology Authority).
So we will have to wait and see if the price will come down further compared to what we are currently paying.
The price that’s being recommended by Nicta, I believe, is quite close to what it should be.
But it may require some minor adjustment to take into account cost of doing business in
PNG, which is much higher compared to other countries in the Pacific.
Dataco would have other infrastructure cost like most ISPs and telecommunications companies have to bear to deliver the service to the end user.
Having said this, it must be noted that 66.7 per cent of the cost was funded by the Australian government and it was given to PNG as a gift, that will benefit the country and the people, because fibre is not only for ICT community, this will also change the lives of the ordinary communities once it goes to the other provinces connected via domestic cable currently being installed by DataCo.
Eventually, what will happen in few months’ time is that we will have connectivity to multiple gateway out of the country, providing redundancy and reliability.
Currently, the internet is so expensive in the country because the ISPs rely on backup satellite service which is quite expensive compared to fibre, so we do not have a choice as a business
but to pass that cost to the consumer.
Eventually, when reliability is achieved on the fibre then there will be no need for backup satellite service which will reduce our upstream rate and the savings will be passed to the consumer.
So as a whole, the consumer will benefit eventually, that will drive the growth of data business quite high in PNG, compared to the current rate.

Digitec ICT Ltd chief executive Nirmal Singh in his office in Port Moresby

Our rate is very high compared to rest of the world, even Fiji.
PNG is a much larger economy, and much bigger population compared to Fiji.
Our price should be on par or cheaper than Fiji, because our consumer base is much larger.
The PNG Government is taking very good initiatives to control these and I believe that the Government is also spending money on the infrastructure, so PNG is on the right track to provide best class internet service in the very near future.

Q: From an ISP’s perspective, will the end-user experience an immediate internet price drop?
Good, cheap and reliable infrastructure will bring real benefit to the country in terms of agriculture, tourism, medical, tele-medical and distance education.
All these benefits can be used by PNG citizens which they deserve.
Technology must be used to change lives.
The issues faced by major players are, sense of ownership in the county, there is a lot of vandalism, theft and sabotage carried out for no reason. These unwarranted
action by the few is adding to the cost of maintenance and down time.
If we can change the attitude and mind set of our people so they can understand that infrastructure and technology is here to improve human life, then I believe we will be next to any other country in the world in terms of lower price of internet.
But having said that, the fibre is already in the country from last December but, unfortunately, the reliability is not there yet.
We are still having downtime, in due course, all that will be fixed since there will always be teething problem with any new projects which such a magnitude.
DataCo is doing a great job resolving all the issues promptly.
You would not see an immediate impact on the price going down because all the ISPs and telecommunications companies hold current contracts with the satellite vendors, which has to be phased out. We cannot do that overnight.
So people are thinking that now that the fibre price is going down, all of a sudden, there will be a reduction in price that will not happen immediately.
There will be a gradual reduction in price.
You will probably notice in the next nine to 12 months the price going down by 50 to 70 per cent.

Q: Has Digitec connected with the cable already?
We were the first ISP to connect with the Coral Sea cable last December.
Back then there was a one-month free trial. So we were the first one to go onboard.
But I am pretty sure all the ISPs must be taking advantage of the cheaper and lower latency fibre provides by now.

Q: Do you think PNG has the expertise to work in the ICT sector?
The problem we face is the shortage of skilled labour.
There are not enough local specialists, those we can hire and retain for a long time for support.
We have relied a lot on expertise from overseas, which also adds to the cost.
Digitec has introduced a graduate programme which allows PNG citizens to study and get hands-on experience on the job mentored by expatriate engineers.
So hopefully in few years we do not need to use so many expatriate engineers.

Q: The cost of doing business in PNG is very high compared to some of our closest neighbours. Do you think this is an added factor that will be passed on to the consumer?
The cost of doing business is quite high in the country because rental cost is high.
Electricity, diesel, and security costs add up to the internet price eventually.
That is why we are paying such a high price.
I do not think we will ever get to the price level in Australia, New Zealand or Fiji because there are other hidden costs.
So bringing the price of cable down only will not drive the cost lower on its own.
All other expenses are adding
to the cost of doing business in PNG.
Because of external factors, the real benefit of new fibre will not be achieved in terms of lower price.
There are many external factors.

Q: Do you see a rise of more ISP coming into the country that will add to more competition?
Competition is good for the country and consumer.
We hope more players will come in, especially home grown local SMEs, given the emphasis provided by the Government.
But the biggest challenges for all the players is towers.
There is no tower sharing in the country at the moment so they will not be able to provide coverage to wider population.
This is what holding SME and the small companies from coming up as an ISP, plus the cost of setting up is quite expensive.
We need lot of capital to build infrastructure.
As for Digitec, we manage to build few towers ourself to provide ISP service in Port Moresby and Lae.
We do not have towers in all other provinces.
Other provinces we are providing Vsat service using KA and C-band.