Chapter 1: Taking Stock of Telecommunication Connectivity and Associated Supportive Infrastructure in the Pacific¹

I. Introduction to the Situation

The Pacific has a population of about ten million people, if one includes Timor Leste and Papua New Guinea. A lack of employment opportunities, despite major investments in education and health care, has led many to migrate in search of better opportunity. In larger countries, such migrations are often from rural to urban areas. In the Pacific, a similar move is often international. Emigration has reduced populations in some communities to levels that create fears for their sustainability. Can improved connectivity help stem such emigration, and perhaps attract sustainable opportunities?

The Pacific can be a good base for some to live and work in a globalized economy. We are in an age in which information and communications technology (ICT) allows executives, consultants and other knowledge workers to telecommute from their dream location. Such location might be a rural farm or ranch, mountain top or valley, lake shore, seashore, or island paradise. Indeed, parts of rural North America and Europe, Caribbean islands and other formerly remote areas have found opportunities arrive at their doorsteps, with such entrepreneurs setting up their 21^st-century “homesteads”.

With improved communications and opportunities, many Pacific islands would be able not only to attract back some of their “diaspora”, but also to benefit from globalization and the dreams of others to start a new life on a Pacific island. This trend could lead to investments by native-born or immigrant entrepreneurs desiring to live and work on a particular Pacific island. Some economies are looking to attract Japanese or other retirees. ICT-strengthened small businesses can be a great ally in appropriately capitalizing the Pacific.

For many years, representatives from Pacific island economies have met in forums facilitated by United Nations bodies, the Pacific Island Forum and others, to discuss possible solutions to this challenge. Plans and declarations abound. Recent efforts include the Pacific Islands Information and Communication Technologies Policy and Strategic Plan of 2002, and the Pacific Plan of 2005. The latter is a far-reaching framework for regional cooperation, and includes a Pacific Regional Digital Strategy,² reviewed and elaborated into a road map in 2006, for review by ICT/Communications Ministers in the first half of 2007. In addition, the Terms of Reference for the Task Force on Regional Approaches to ICTs in the Pacific were also set in March 2006. A stepladder for implementing the Digital Strategy is shown in Figure 1-1.

With many unfulfilled plans, Pacific island economies may appear to be in a quandary. However, worldwide developments in recent years bring hope that positive developments elsewhere can lead to equally positive developments for Pacific island economies.

Several recent studies by various organizations provide important information for developers of Pacific telecommunications. This report adds and assesses connectivity and Human Development Index values for several Pacific island economies. The report notes several recent developments in telecommunications, institution-building and partnerships supporting small developing economies that provide valuable new context. This information shows interesting patterns, which can help planners and decision makers to visualize the path toward a better-connected Pacific. Findings of several such studies are summarized in this report, including its appendixes.

Figure 1-1. Pacific Plan Digital Strategy: Stepladder for development³

II. Historical Development of Connectivity in the Pacific

Undersea cables have traversed the Pacific for over a century. Cable and Wireless reached Singapore, Hong Kong and Australia from the United Kingdom with telegraph cabling by 1871. That company eventually gained recognition for connecting Fiji, Vanuatu, Tonga and the Solomon Islands⁴, and for providing similar services (and eventually perceived monopoly status) to the Caribbean. In 1902, when Cable and Wireless received permission to build the telegraphic Pacific Cable between Canada, Australia and New Zealand, connectivity was as appears in Figure 1-2. That cable included Fiji, Norfolk Islands and Fanning Islands. By 1940, the situation had evolved, with Hawaii, Midway, Guam, Saipan and Yap also connected by cable, and most other island groups connected by wireless (e.g. radio) communication (Figure 1-3).

Since then, cabling advanced to support telephone services. The first Pacific cable was installed in 1957 between the United States mainland and Hawaii (not yet an American state). Copper coaxial telephone cables followed to Australia and many other economies in the Pacific.

First-generation fibre-optic digital cabling (with ~500 Megabit bandwidth) was introduced in the late 1980s, with current-generation cabling (~500 Gigabit or more bandwidth) arriving in the mid-1990s. Island economies situated near primary routes between North America, Japan, Australia and New Zealand were most likely to be linked. Currently, Fiji, Guam, the Northern Mariana Islands and Papua New Guinea have some form of modern international cable connectivity. Cabling projects in various stages of development should benefit the Federated States of Micronesia, the Marshall Islands and New Caledonia within the foreseeable future.

Radio has linked many “remote” Pacific islands for decades. Mobile telephony, wireless networking, two-way⁵ and government trunked radio services⁶ are modern evolutions of such technology, and are likely to provide important connectivity for public and governmental users.

Figure 1-2. Trans-Pacific connectivity was strengthened by the Pacific Cable from 1902 ⁷

Figure 1-3. Cable and wireless communications in 1939⁸

Satellite communications began serving the Pacific in the 1970s. C-band connectivity still dominates the Pacific with relatively reliable but expensive services. Satcom brought greatly increased telephone and broadcasting support, including global programme content feeds. Television broadcasting services spread rapidly from the mid-1970s, now covering population centres in most Pacific island economies. Internet services began in 1995 in Fiji, 2000 in Tuvalu, with gratis non-commercial wireless Internet beginning in Niue in 2003. However, it is reportedly still difficult to send a multi-page fax in several countries.

III. The Socio-Economic Situation

The United Nations Development Programme has produced Human Development Reports since 1990, to considerable critical engagement. The 2006 edition of the report includes 177 economies. In this report, the coverage of the Human Development Index is extended to include more countries, and it currently has 232 countries with a computed HDI. Table 1 thus includes several economies in the Pacific not yet covered by UNDP.

One sees a wide diversity of life expectancies in the Pacific island economies, from 56 to 80 years of age. The average life expectancy is neither short nor long at about 70-71 years. With 17 economies having average life expectancy rates of 70 years or more despite concerns over the logistics of providing the best medical care, this is a testament to the already significant investments in health care in many Pacific island economies.

Four economies have literacy rates of 57 through 77 per cent, but the rest have literacy ranging between 89 and 100 per cent (Table 1-1). Omitting the four economies with low literacy rates (noting that they include some of the larger populations⁹ in the region), one finds a basic literacy rate of about 95-96 per cent in the other economies. This testifies to the long-standing investments in education of many economies and their developmental partners, and bodes well for utilization of any future improved telecommunications infrastructure in such economies.

Incomes vary widely; but Pacific economies tend to have moderate incomes in comparison with their Human Development Index. This report introduces the GDP Ratio,¹⁰ an indicator of an economy’s economic performance vs. overall human development. Because they have generally high basic literacy rates and life expectancies that are not low, many Pacific island economies may be considered potential knowledge economies if so supported – including with telecommunications. Pacific island economies might be cost-effective partners in knowledge-economy industries such as data entry, help desk and customer support services for the 24-hour globalized economy – if the telecommunications infrastructure were effective and affordable enough to support such industries¹¹. Wireless “m-banking” and other ICT-enabled services could be implemented

Table 1-1 indicates that the three economies with Human Development Indices below .600 are among the most populous economies in the region. This suggests that creative policies and programmes in those countries may be useful to raise overall telecommunications penetration rates for the Pacific. Such policies could include the fostering of Internet cafés, shared telephony (perhaps like Grameen Phone in Bangladesh), or mechanisms that leverage the family/clan social systems of many Pacific countries, combined with help for people in lesser developed communities to learn how to benefit from ICTs. The opportunity for developmental organizations (such as non-governmental organizations) is thus significant.

Most independent Pacific island economies have Human Development Indices in the middle-range of .59 - .79. This is a stage at which ICT use (as indicated by the Connection Index of Table 1-2) begins to take off. Many developing countries defer such issues as ICT infrastructural prioritization until education and health-care investments are delivering results. However, the Pacific island economies that have reached such a stage might logically prioritize ICT when such investments appear timely for delivering results. That time appears to be now.

Table 1-1. Population, gross domestic product per capita, life expectancy at birth, literacy, and Human Development Index for Pacific island economies

Economy	Population**   2005         2015		GDP*** PC PPP	Life**** Expectancy	Literacy	HDI*****	GDP****** Ratio
American Samoa*	57,084	55,696	5800	76	97	0.81	0.5
Cook Islands*	21,388	22,984	5000	72	95	0.72	0.7
Fiji	905,949	1,023,479	6066	68	99	0.758	0.7
French Polynesia*	274,578	309,714	17,500	76	98	0.78	1.6
Guam*	171,019	192,302	15,000	79	99	0.90	0.7
Hawaii*	1,263,000	1,385,952	53,123	80	99	0.97	1.6
Kiribati*	105,432	128,643	2397	62	100	0.61	0.6
Marshall Islands*	60,422	72,139	2300	71	94	0.62	0.6
Micronesia*	108,004	105,183	3900	70	89	0.61	1.0
Nauru*	13,287	15,494	5000	63	95	0.71	0.7
New Caledonia*	239,067	241,731	15,000	74	91	0.79	1.3
New Zealand	4,195,729	4,395,567	23,413	79	99	0.936	1.0
Niue*	1,733	n.a.	3600	70	95	0.78	0.3
Norfolk Island*	1,828	n.a.	27,000	78	99	0.93	1.0
Northern Mariana Is*	82,459	100,286	12,500	76	97	0.84	0.8
Palau*	21,492	22,577	5800	70	92	0.76	0.6
Papua New Guinea	6,002,079	6,789,589	2543	56	57	0.523	1.1
Samoa	183,308	177,195	5613	71	99	0.778	0.6
Solomon Islands	552,438	679,635	1814	63	77	0.592	0.6
Timor Leste	1,062,777	1,269,603	1033	56	59	0.512	0.5
Tokelau*	1,403	n.a.	1000	67	94	0.63	0.2
Tonga*	114,689	131,199	8694	70	99	0.81	0.7
Tuvalu*	11,810	13,676	1100	68	98	0.67	0.2
Vanuatu	217,955	235,949	3051	69	70	0.670	0.7
Wallis and Futuna*	16,025	17,367	3800	69	95	0.71	0.5

* Economies so marked lack a UNDP computation for Human Development Index. Presented values of HDI, using data from a variety of sources, are modelled by the author after the UNDP approach. Other parameters in this table also use data from a variety of sources.

** Data from censuses, and estimates for 2005-2006 and 2015 populations.

*** Gross Domestic Product, Per Capita, corrected for Purchasing Power Parity.

**** Life expectancy at birth.

***** Human Development Index. Where given in three decimals, the figure is from UNDP (2006). Where in two decimals, the figure is modelled by the author (Hastings, David A., 2007. Enhancing the Human Development Index. In preparation.).

******* GDP Ratio is the ratio of measured GDP per capita to the GDP per capita proportional to an economy’s Human Development Index. For example, Samoa’s GDP per capita is reported at US$6,823 in the 2006 Human Development Report, but the GDP corresponding to a GDP Index of .776 is about US$10,600. Thus Samoa’s GDP ratio is 6823/10600 = .64. With Samoa’s high literacy rates and low GDP/capita, Samoa might be a good location for a knowledge-industry SME, given adequate connectivity.

IV. The Connectivity Situation

Many indicators of connectivity are hybrids attempting to describe (a) conditions conducive to connectivity (such as literacy) and (b) actual connectivity performance (e.g. users). Besides being difficult to assess, such indicators often are forced to omit many economies, for which data is lacking. This study offers a relatively straightforward Connection Index, which (a) focuses solely on user connectivity, and (b) includes most Pacific island economies by sometimes using diverse data sources. In addition, another indicator of Internet development is presented for most Pacific island economies. Assessment of that index illustrates potentially useful patterns of Internet development and use among Pacific island economies.

Table 1-2 introduces the Connection Index,¹² a simplified indicator of basic connectivity. It sums telephone and Internet use, where telephone use is averaged between fixed and mobile use. Like other indicators, this is imperfect, as it may not be fully consistent between economies. Some economies may be characterized by many users sharing access through Internet cafés, or at their workplaces, whereas in other economies people may have multiple accounts (e.g. one at work, one at home and one on a mobile phone). Nevertheless, it may be a useful framework for tentative use, and improvement – and as reliable as other indicators may be in the evolving effort to describe the developmental situation of ICT.

Table 1-2. Internet and phone use, and Connection Index for Pacific island economies¹³

Economy	Connection Index14	Internet Use	Mobile Use	Wired Use
American Samoa	25	10.0	4.0	26.0
Cook Islands	41	20.0	8.0	34.0
Fiji	22	7.2	16.8	12.4
French Polynesia	49	21.5	34.0	20.9
Guam	103	47.9	59.4	50.9
Hawaii	126	69.3	65.0	48.0
Kiribati	5.3	2.4	0.7	5.1
Marshall Islands	8.2	3.5	1.1	8.3
Micronesia	25	12.6	12.7	11.2
Nauru	17	2.3	13.0	16.0
New Caledonia	72	32.1	56.7	23.0
New Zealand	125	58.9	87.6	45.1
Niue	95	52.9	22.0	62.0
Norfolk Island	112	42.2	0.0	139.0
Northern Mariana Islands	46	12.7	26.6	40.0
Palau	28	8.9	5.0	33.0
Papua New Guinea	3.7	2.9	0.4	1.1
Samoa	13	3.3	13.0	7.3
Solomon Islands	1.6	0.8	0.2	1.3
Timor Leste	1.6	0.2	2.5	0.2
Tokelau	10.8	n/a	0.0	21.6
Tonga	17	3.0	16.4	11.3
Tuvalu	16	12.5	0.0	7.0
Vanuatu	7.9	3.5	5.8	3.1
Wallis & Futuna	12.1	5.9	0	12.4

The most-connected economies in the Pacific include Guam, Hawaii, New Caledonia, New Zealand, Niue and Norfolk Island, while American Samoa, the Cook Islands, Fiji, French Polynesia, the Federated States of Micronesia, the Northern Mariana Islands and Palau are “middle-connected”.

A. Communication Satellites

Information on satellite connectivity is presented in Appendixes A and C. Most Pacific island economies have external satellite communications links. Many Pacific economies utilize satellites for domestic connectivity, which might be supplemented by cable, wire, wireless or radio communications. However, the bandwidth available, and associated costs, have tended to dampen telecommunications growth.

Several satellites offer communications and Internet connectivity to the Pacific. None of those satellites currently in use was designed specially for Pacific island States, but rather are more suitable for international communications over broad areas. The low power densities of such satellites require large Earth stations offering limited bandwidth, but requiring high cost of installation and maintenance in storm-susceptible areas. Such expensive bandwidth has discouraged stakeholders from more widely utilizing satellite communications for smaller markets.

More recent satellites, on the other hand, may have shaped or spot beams covering target areas with higher power density, so that inexpensive user terminals may be installed at community, business, or even household levels, providing affordable bandwidth where appropriate policies and services are in place. However, current usage and slow growth rates may discourage satellite service providers from designing and deploying greater capacities at lower costs for the Pacific. Similarly, the belief that the cost of developing and operating their own satellite would be prohibitive may have discouraged the Pacific islands from considering such an option.

In addition to C-band systems, recent developments have led some other parts of the world into Ku- and Ka-band satellite communications, offering higher bandwidth (e.g. throughput) through smaller and less expensive ground stations. Most recently, Internet Protocol (IP) Ku/Ka-band satellite communications have begun serving North America and Asia with ANIK-F2 and WildBlue-1 (Ka band) and IPStar (Ku band for user terminals, Ka band for hubs), respectively. WildBlue Communications markets ANIK-F2 and WildBlue-1 as an economic means of connectivity for rural residents, SMEs and telecommuters in the United States. IPStar provides Internet Protocol satellite connectivity marketed in Asia, and will be used by Thailand in implementing its universal service obligation. It has noted that retail services (which it leaves to business partners to provide) may cost as low as US$50/month – making it competitive with completely unregulated DSL (digital subscriber line) markets elsewhere. However, such services are new, and do not yet serve most of the Pacific.

Meanwhile, very small aperture terminals (VSATs) are available to parts of the Pacific Ocean area, at retail costs below US$130/month as shown (plans with an “R” code) in Table 1-3. A full transponder can cost about US$100,000-$150,000/month (or sometimes substantially less for longer-term and larger-volume lease).

Note the lower costs for retail offers (which may be for a maximum bandwidth that may not be sustained if a customer actually tries to use the maximum for sustained periods), and the higher amounts paid by telecoms operators (which are normally for a contracted-for higher level of performance). Note the increasing costs per Megabits/second for larger retail plans (perhaps because larger users may be more likely to use a higher proportion of their planned bandwidth), but there is a tendency toward lower costs per Mbps for operators, as they are more likely to enter into longer-term contracts, for one or more full transponders, at higher usages. This indicates the potential for South Pacific neighbours, near Tonga, Samoa, and Vanuatu, to form a user consortium to lease one or more full transponders, for considerable potential savings for each operator in such a consortium. States in the North Pacific may be able to do similarly.

For telecoms access “now” for 230 populated islands lacking telecoms,¹⁵ mobile satellite telephony might be useful. The Iridium satellite phone system has global coverage, including Pacific islands, supporting voice, SMS and data transmissions. Solar chargers are available. One may purchase a new Iridium phone handset for about US$1375, and a used handset for a lower price, with prepaid rates of about US$1/minute anywhere in the world to a fixed-line or mobile phone, or about US 50 cents to another Iridium phone. These rates are available if one prepays¹⁶ for the air time, and are retail rates. Negotiated bulk agreements for one or more States might reduce such costs. A Grameen Phone arrangement, in which one person/office contracted for the phone and air time, then retailed the access to other island residents, might share call volumes to reduce rates. Thuraya’s ECO service¹⁷ notes calling rates of 20 cents/minute to another Thuraya phone, 39 cents/minute to other systems’ phones. It plans to begin service to the Western Pacific in 2008, and normally provides service to national markets in partnership with local service providers – thus offering the potential for reduced international calling and universal service, while offering revenue potential to local service providers.

Table 1-3. Retail offers (upper half – with “R” code), and costs to telecom operators (lower half) for more reliable satellite bandwidth

Plan	Kbps Down	Kbps Up	US$/ Month	US$/ Month/ Mbps
Home18 R	128	42	127	508
Business17 R	256	64	165	660
SAT Pro17 R	512	128	173	346
Corporate17 R	1,024	512	605	1,210
SAT Biz+17 R	1,024	1,024	1,512	1,512
SAT Biz++17 R	1,024	1,024	2,149	2,149
SAT ISP17 R	2,048	2,048	5,821	2,910
Telecom Niue19	2,048		16,000	8,000
SES New Skies NSS-7 Ku-band transponder20	54,000		150,000	2,778
OPT20 & TCI217Direct-to-Home/Office	84,000		250,000	2,976
OPT20 & TCI20 Phone	108,000		208,333	1,929
New Caledonia20	300,000		250,000	833
OPT17 & TCI20 Internet	300,000		250,000	833

B. Undersea Cables

Cable infrastructure is itemized in Appendix A. Table A-2 records historical, current and announced (with some public documentation) cables serving Pacific island economies. It omits cables running solely between the Americas and Hawaii, between the Asian mainland and Japan, the Philippines, Indonesia, and between Australia and Asia via the Indian Ocean. Due to inadequate information, it also omits the proposed Pacific Island Cable System by Cable and Wireless, announced as intending to connect almost all island economies²² with Australia. Table A-3 depicts the cable and satcom international traffic for 2004, 2000, and 1996 to, from, or transiting the United States, as reported by the United States Federal Communications Commission. Table A-4 and Figure A-5 depict growth in submarine digital cable bandwidth. Table A-5 and Figure A-6 depict growth in cable and satellite connectivity in the Pacific, and the Eastern Caribbean area of small island economies. Though this does not describe all traffic for the Pacific island economies, it is a reliably documented indicator of relative traffic and growth thereof. In Appendix A, Figure A-4 maps currently active undersea cables,²³ plus discontinued cables that could be deployed (see Table A-2), as well as planned cables included in Table A-2. Figure A-4 also shows a bathymetric map of the Pacific, to enable planners to envision where cables might be most accessible – for possible splicing of additional loops linking additional island economies.

External cable connectivity includes Fiji, Guam, the Northern Mariana Islands, and Papua New Guinea. The Federated States of Micronesia and the Marshall Islands are building a cable to Guam. Though several economies are near the Southern Cross Cable Network, and close to Fiji’s Southern Cross landfall, no nearby country has built a local loop to those communications media to date. The example of the SAT3/WASC/SAFE cable around Africa, described in Appendix B2, is an intriguing business, connectivity and service model for the Pacific to consider.

The scientific community has developed a strategy for reusing retired cables, especially first-generation fibre-optic cables. Papua New Guinea used such an approach to redeploy part of the PacRimWest cable to Port Moresby in 2006. This pioneering effort might give other countries ideas about doing similarly. These developments are described Chapter 3.

Internal connectivity is improving in several Pacific island economies. Several of these have begun installing buried fibre-optic cables to replace or supplement copper wire. Others are installing VSAT or other satellite connectivity to remote locations, as partly summarized in Table B-1, Appendix B. Digital switching has also been installed in several urban areas in the Pacific. However, analogue switching, old copper cable, and analogue mobile telephones (or no mobile service) characterize several parts of the Pacific.

C. Terrestrial Wireless

Terrestrial wireless only meant two-way radio, broadcast radio and television until recently. Mobile telephony is becoming popular in some Pacific states, increasingly so with the conversion of first-generation analogue systems to digital technology earlier this decade in many economies. However, the future is likely to see considerable growth in terrestrial wireless, for trunking in some amenable locations, and for end-user connectivity in many locales, partly owing to upgraded 21^st-century approaches to radio.

In many cases, small islands may be amenable to new forms of wireless networking such as WiFi, WirelessLAN, WiMax, or WiBro. WiMax can reportedly serve an area of up to about 10,000 square kilometres from one fibre-optic or VSAT node. These can thus greatly increase the coverage around a cable landfall or VSAT installation.

Niue is using wireless LAN to provide gratis non-commercial Internet to its residents and visitors. Presumably, this could offer Voice-over IP connectivity as an alternative to Niue’s analogue cellular phone system and old copper wiring. Such networking may in the future provide entertainment, public safety, distance learning and medicine, and other forms of direct-to-home communication via solar-charged notebook computers even in homes lacking electrical wiring (or after a failure of the electrical system, say, in a storm).

Tonga is using GSM-VSAT-IP-based system, with wireless and VSAT between islands. Palau has fibre-optic domestic networking for telecommunications, including cable television, while international connectivity is via satellite.

V. The Policy/Regulatory Situation

Appendix C summarizes several aspects of the policy/regulatory environment of Pacific island economies. Most, but not all, economies have laws and policies related to telecommunications. However, many of these pre-date the explosive impact of the Internet, mobile telephony, and broadband on telecommunications benefits to society. The regulatory and ownership status in many Pacific island economies remains uncompetitive, though a number of discussions and actions have moved toward increased competition in some Pacific economies.

One of the most challenging concerns regarding enhancing Pacific connectivity is the monopoly situation in telecommunication services in several Pacific developing countries. Governments have had long-term grants of monopoly status with some service providers to protect profits from their investment and services. Prior to the current explosive penetration and development of information and communication applications and services, such agreements were considered reasonable for attracting investment in telecommunication infrastructure and relevant services provision. However, recently, the rapid transformation of information and communication services has been considered a major driving force in socio-economic development, and the “digital divide” has been considered a major gap to be filled through joint efforts of government, the international community, development agencies and civil society. As indicated by many studies, lack of enabling competitive environments has hindered the growth of information and telecommunication services and applications in parts of the world where such competition is lacking – including the Pacific. Such monopoly arrangements may further obstruct development in Pacific island States, which need broader-based cooperation and investment for success. The experiences of the Eastern Caribbean Telecommunications Authority (ECTEL, see Appendix B3) in dealing with their inherited monopoly situations may provide a useful example for the Pacific to consider.

It is noted that regulators and service providers have often for several years been separate entities,²⁴ though both may be government-influenced. The Internet Root-Zone Whois Information of Appendix C indicates that many Pacific States refer to offshore technical expertise, while others (even ones with relatively small populations) cite domestic points of contact for both administrative and technical matters – thus keeping the knowledge generated from at least initial contacts within the country.

Such an environment may come at a cost. Costs for Internet and mobile telephone access tend to be higher in Pacific island nations than in peer small island economies elsewhere, even when adjusted for income status.²⁵ Professor James McMaster describes advantages for deregulating telecommunications markets in the Pacific,²⁶ as does Naruse.²⁷ McMaster estimates benefits to consumers in 13 Pacific island economies to be about US$66 million annually. If one extended this to the other economies included in this report, by rough extrapolation by population, perhaps US$400 million might be saved over five years. Costs/challenges might include slower roll-out of some services to rural customers distant from population centres, reduced market power by incumbent single [monopoly] providers, and the need for such providers to reform for improved efficiency and customer focus, and the need for improved regulatory structures to protect otherwise marginalized customers. Benefits might include reduced tariffs, increased efficiency and customer focus of providers even in some rural areas, introduction of new services, including mobile telephony and Internet, better and more affordable Internet access for e-learning and other benefits, better and more affordable governmental services to the public, local businesses becoming more competitive in the global marketplace, new opportunities for local business in the global marketplace, increased governmental revenue from a more rapid growth of total ICT revenue, and capital savings that can be reinvested in improved capabilities.

Zwimpfer Communications (2002, for UNESCO) addresses additional aspects of governance, specifically related to the Internet. ECTEL²⁸ provides a case example of the benefits of such deregulation, which Pacific island economies may wish to adapt for their own benefit.

John Ure (2004, p. 3, see references at the end of this report) notes that “not all telecom markets are elastic, yet evidence . . . suggests that the growth potential is enormous”. Ure notes that the public sector has several roles to play:

1. In the area of institutional and policy reform;

2. Planning and capacity-building, including coordination between stakeholders;

3. Regulatory reforms to ensure consistency of regulations;

4. Provision for universal access, and tackling the digital divide through the encouragement of the adoption and diffusion of ICTs;

5. Large-scale infrastructure projects, such as backbone and technology park initiatives;

6. Noting that telecom markets in many areas are elastic, to have policies and regulations that avoid becoming locked into traditional yet unsustainable business models of incumbents – rather becoming flexible enough to take advantage of market elasticity.

Ure also notes that wise implementation of ICTs in developing countries often results in net increases in exports over imports for those countries, e.g. through increased access to previously unknown SME products and services to a new overseas market. This counters some fears, and offers hope for additional net benefits from carefully considered ICT developments.

VI. The Institutional Situation

Pacific island economies tend to be improving their telecommunications competitiveness. They fall between leaders and less developed economies. Privatization is ongoing, but relatively slowly. ICT infrastructure is developing, but still lagging behind many countries with similar levels of Human Development Index. Some of this is due to relatively high costs compared with incomes for telephone installation, monthly charges, calls, Internet, and other services. Much old infrastructure remains, though buried fibre and copper are becoming somewhat more common within economies. Radio communications are still vital for reaching almost half the islands of Pacific economies – those that are generally more rural than their better-connected siblings. However, an impressive trend appears to be underway to connect several countries with undersea cables – notably Micronesia, the Marshall Islands, Papua New Guinea (with its pioneering redeployment of cable from PacRimWest to its new APNG-2) and New Caledonia.

Fixed-line telephone growth is generally low in the region, with little growth in the last several years. Where service is largely acceptable in urban areas, many rural areas remain disconnected, and others are marginally served. According to Guild¹⁷, taking demographics into account, most urban residents have telephone access. Urban fixed-line penetration has been estimated at 2-10 times that of rural areas.²⁹ Fixed-line density is about 50 per cent in Guam and Niue, but ranges to less than 2 per cent in Papua New Guinea, the Solomon Islands and Timor Leste (with a combined population of about 7.5 million people).

Modest numbers of radio and television stations exist in the Pacific, with few countries lacking local radio or television. Broadcasting infrastructure tends to be basic and analogue, however.

The Pacific recently saw a major shift from analogue to GSM mobile telephony, and to lower-cost prepaid systems, which have been received favourably by the public. Mobile telephone growth has been strong in several areas, with penetration rates of over 50 per cent in Guam, New Caledonia, and (very recently) Samoa. However, mobile penetration remains below 10 per cent in 13 economies. Mobile phone penetration exceeds that of fixed lines in Fiji, French Polynesia, Guam, Micronesia, New Caledonia, Samoa, the Solomon Islands, Timor Leste, Tonga and Vanuatu. Some of this success is due to competition, or increased competitiveness in the approaches of service providers. Internet penetration is over 50 per cent of the population in Niue (where it is free) but less than 1 per cent in the Solomon Islands and Timor Leste.

The Internet is one arena with growing competition, with six countries having a choice of ISPs in 2004. Increasing numbers of governmental organizations are building web sites and delivering information to citizens and other stakeholders. In many countries, at least a few local companies are also serving local users on the web, with information portals, news (web-based versions of publications for residents and expatriates), banking services, and the like. Some countries with popular domain names have thousands of web sites under their top-level domains – many of these highly commercial – a few of them genuinely popular. Some economies with potential, such as Micronesia (.fm) and Tonga (.to) have fewer popular web sites than might be expected, whereas at least one country with an apparently routine domain name (Samoa, .ws) has many popular web sites.

Although some of Papua New Guinea’s telecommunications deregulation has fallen behind schedule, Telikom PNG has been reported to be taking anticipated competition seriously. It has reportedly invested in training on new management approaches, and has taken several initiatives, including building a pioneering new undersea cable, and upgraded and extended satellite communications infrastructure. Telikom PNG’s pioneering example of the APNG-1 cable, and its aggressive rolling out of promotions to use the increased bandwidth coming from this cable, may help schools, hospitals and NGOs to use such services.

In addition to the high prices of entry and access to telecommunications bandwidth and other services, economies and residents of the Pacific are considered to face challenges in limited international bandwidth in countries lacking international cables, legacy regulatory frameworks, sometimes unreliable power supplies, limited support personnel, and limited technical savvy among the populace for developing and supporting applications and services¹⁷. Despite such a tone, conditions are improving. Several formerly novel technologies are considered current necessities, at least among the urban middle class.

The Pacific has had various cooperative forums, organizations and other initiatives that have addressed Pacific-wide cooperation, in subjects such as telecommunications. Many such institutions have produced declarations of commitment, policy frameworks, or other agreements. Challenges have been realized in taking such outputs to the next stages of positive outcomes, where others had only the agreement, and the understandings leading to the agreement, as the outcome. In other cases, such as USPNet, discussions and agreements led to the development of institutions which have served the Pacific well, in their designated areas of activity – and in some cases serve as stepping stones for the next steps (in this case, for possible Pacific-wide videoconferencing, for any number of purposes).

The most recent wide-ranging agreement on Pacific-wide cooperation in development is the Pacific Plan. Under this umbrella, Pacific leaders have called for the serious challenges facing the countries of the Pacific to be met through sharing scarce resources and aligning policies to strengthen national capacities to support their people. The Pacific Plan was developed through broad-based national and regional consultations, and was endorsed by leaders at the Pacific Islands Forum meeting in October 2005. The Pacific Plan includes regional organizations, non-State actors and development partners.³⁰

One element of the Pacific Plan is its Digital Strategy.³¹ At the Pacific Islands Forum Information and Communications Technologies Policy Meeting in Wellington, New Zealand, on 28-30 March 2006, participants agreed to establish a Task Force to investigate the potential for developing regional approaches to ICTs to further implement the Digital Strategy. The Task Force is to analyse the benefits to be gained from regional cooperation, investigate the full range of issues and modalities related to developing such regional cooperation, and investigate the potential of regional approaches in using ICTs for improved health and educational outcomes. The Task Force will consider priority areas, whether regional approaches will be effective in each area to be considered, and the shared concerns where the region might make the most useful gains from a shared approach.

In the realm of telecommunications, the Pacific has numerous governmental and private sector entities, including non-governmental actors, and also development partners among nations and international organizations. Many of these are summarized in Appendix B of this report.

One parallel, and potential developmental partner, is the Eastern Caribbean Telecommunications Authority, mentioned several times in this report. It is interesting that discussions were initially widespread, but that some economies decided to forego their participation, at least for the meantime, in ECTEL. This did not cause ECTEL to be stillborn. The organization forged ahead with the economies committed to acting then, while continuing to dialogue with those economies that (for whatever reason) had not participated from the outset. There are reports that at least one of those initially non-participatory States is considering if it should now join ECTEL, when, and under what conditions. Thus, in the spirit of the Pacific Plan being a living entity, with living documents, participation in ECTEL began with the then-interested parties, without waiting for the then-reluctant parties, while continuing to dialogue and show an open door to those economies that were not participating at any one time. Several years later, parties appear to be satisfied by this approach.

VII. A Vision

Communities in the Pacific will be, at long last, well-served by access to information and communication products and services in a competitive environment that gives them a choice of mobile, Internet and other services. Major population centres, and outlying areas alike, are connected through a variety of means. These means include submarine fibre-optic cables, communication satellite terminals and phones, and wired, microwave and WiMax wireless networking. Peoples can prioritize between individual/household accounts, or shared access through Internet cafés, special mobile service packages such as Grameen Phone’s Village Phone,³² or community e-centres. Community e-centres can provide mini-“stadium-like” atmospheres for global sporting events, mini-“cinema-like” atmospheres for films, as well as individual and small-group access for education, small business (including medical consultancy), and entertainment. Through various means, many people have become e-entrepreneurs, making money by providing e-business services of various types.

For various reasons – often summarized as “little business potential” – the Pacific has fallen behind its developmental peers in benefits from the current revolutions in information and communications. The Introduction to the Pacific Regional Digital Strategy states, “Numerous studies have highlighted both the potential of, and impediments to, ‘ICTs for every Pacific Islander.’ The Communication Action Plan (CAP) and Pacific Islands Information and Communications Technologies Policy and Strategic Plan (PIIPP) have recently made clear recommendations on actions required for ICTs to reach potential in the region. However, countries have been less than successful in following these recommendations due to challenges such as scale, institutional capacity and isolation”.

This statement no longer need be true. Parallels exist in Eastern Caribbean and African States. Some small island States are taking a variety of initiatives, which are delivering results. There appears to be a window of opportunity, and potential “best practices” and advisers/coaches in virtually every part of the connectivity process.

Several recent developments, summarized in this report – including the appendixes – may be synthesized toward the following vision:

1. Pacific island economies are diverse and widely separated. Many are near pathways for undersea telecommunications cables between Australia, New Zealand, the Americas and East Asia. In the past, commercial “clubs” co-financed the costs of laying and managing cable services. Now de-regulated, pro-active telecommunications providers in developing countries have joined to finance the laying of new cable systems connecting previously underserved economies in West Africa and the Indian Ocean. At least one developing country (Papua New Guinea) has built upon academic community proposals for redeploying decommissioned first-generation fibre-optic cabling. Other economies (Palau, Micronesia, Marshall Islands and New Caledonia) previously considered small or distant have committed to domestic or international cable backbones. Yet others are close enough to link up with current or possible near-future fibre-optic infrastructure for international or domestic fibre-optic backbone development. A possible system is sketched and “mapped” in Section 2A.

2. Satellite communications have been dominated by relatively low-bandwidth C-band systems; although they are fairly reliable (e.g. in rain storms), commercial systems currently used by Pacific states are not optimized to serve this market, so available bandwidth is expensive. Elsewhere in the world, Ku- and Ka-band systems are serving small, scattered communities with broadband direct-to-home/business models. WildBlue has been providing price-competitive rural connectivity in rural North America, using the Anik F2 and WildBlue-1 satellites. Shin Satellite, through nationally based retailers, has been pursuing a similar model for Asia but not yet for most of the Pacific. Very small aperture terminals have been cornerstones of domestic satellite communications in recent years, and have considerable potential in the Pacific. In the 21^st century, video conferencing has great potential Pacific-wide for cost-effective meeting management in the public and private sectors. Strategically placed communications satellite connectivity can now be designed at lower costs, and/or greater capacity, to provide Pacific-wide service with satellite broadcasting, network feeds, video conferencing, telephone and IP services (including content such as weather forecasts and the support of tourism cooperatives). It could also support knowledge work in the Pacific, such as the staffing of call centres and help desks. Such a system is also sketched in Section 2C and figures 2-5 through 2-7.

While working with potential partners to design and implement a Pacific-optimized communication satellite, Pacific economies might “immediately” reap economies of scale by leasing full transponders as consortia, rather than smaller amounts of bandwidth per State. For example, retail costs for VSAT bandwidth include US$605/month for 1024 Kbps downloads and 256k Kbps uploads in the Pacific (compared to US$19 for similar connectivity for a cable-backed ADSL (asymmetric digital subscriber line) retail residential customer in Thailand). A recent rule-of-thumb is $2000 per megabit, uploading or downloading. However, a full 50-84 Mbps transponder might cost US$120,000+/month, with partial transponder leases costing 20-40 per cent higher.³³ As French Polynesia and the Cook Islands joined forces to share several transponders among their combined population of ~300,000, several countries³⁴ could form consortia to share one or more transponders at similar rates. Several Pacific economies might be able to significantly cut their wholesale costs and/or increase the amount of bandwidth that they could afford – and thereby increase their markets and beneficiaries.

3. Whatever the case, Pacific decision-makers faced with a bewildering diversity of potentials, opportunities, and possibly opportunists not always with public interests at heart, may benefit from having expertise that they could rely on to assist their decision-making. Small economies can federate, somewhat along the lines of the Eastern Caribbean Telecommunications Authority, in order to provide a more level playing field for all stakeholders in a modern telecommunications infrastructure for the Pacific. They may also be able to free themselves from untimely (and even potentially unconstitutional) monopolistic concessions previously agreed to under non-ideal circumstances. Potential elements for such federation already exist at governmental, service provider, and user levels in several sectors. Whether these may be nuclei for stronger, broader, cooperation, or whether new institutions may be useful in such process, remains to be seen.