Mobile internet prices do not drop in PNG

There is a lot of news in the telecommunications sector in Papua New Guinea (PNG), with an imminent purchase of Digicel, the possible entry of a new company, disruptions of Telikom PNG and more. But there is still no mobile internet price reduction.

We started our price tracking investigation right after the official launch of the Coral Sea cable and while the final sections of the Kumul cable were being laid. Given all the pronouncements, promises and predictions made at the time, we anticipated creating charts with downtrend lines and expected some challenging analytical work. But the job has been too simple.

We check the data prices offered through the smartphone menus every Monday and whenever there is no change. From our last update in March 2021, and until the end of March 2022, there has been no price increase or decrease. We focus on mobile internet data prices because PNG’s fixed broadband connectivity is falling behind other Pacific nations and other regions of the world. The offers have remained constant since the beginning of 2020: you can see all our updates.

You may be wondering if this consistency is because the market is priced right. Nevertheless, PNG classifies very poorly in affordability compared to other countries.

You’ll be forgiven for thinking our research isn’t interesting. We can’t produce graphs because they would simply show horizontal lines indicating the constant costs of internet data over time. You might want to forgive the politicians and others who predicted price drops when they spoke at the time of the Coral Sea cable launch two years ago. But such predictions are still being made. The head of the country’s internet wholesaler, DataCo, Paul Komboi, foretold a 50% retail price drop by the end of 2022 when discussed in September last year. We will continue to monitor prices to determine if that prediction holds true.

However, it is worth noting that Mr. Komboi is not in a position to influence retail prices. he heads DataCothat fixes wholesale Internet prices, based on the guidelines stipulated by the regulator NICTA. So while Mr. Komboi is quoted as saying that retail prices will decline, he cannot offer such a guarantee. DataCo sells Internet bandwidth to mobile telecommunications companies and Internet service providers at wholesale prices, and then those companies sell the Internet to consumers at retail prices. The lack of movement in retail prices may be due to a lack of competition in PNG’s retail mobile market, with Digicel holding over 90% market share.

Meanwhile, other developments in PNG’s telecommunications sector are worth noting.

The Australian telecommunications company Telstra is going to buy Digicel Pacific Arm. That is, Digicel’s operations in six Pacific countries: PNG, Fiji, Nauru, Samoa, Tonga and Vanuatu. But he won’t do it alone. The Australian government will provide substantial assistance. In fact, Australia will disburse most of the funds, although Telstra will end up owning all of Digicel’s operations in the Pacific. The deal has received mixed responses: from comments cozy the decision calls for it to be invested. PNG’s Independent Consumer and Competition Commission (ICCC) has dice the go-ahead for Telstra’s purchase of Digicel’s operations in PNG and clearance has also been granted by the regulator.

A key factor in this agreement is the substantial burden of debt owned by the parent company, Digicel Group. Despite having a large market share and being profitable in png and other Pacific nations, the company as a whole has had a great debt burden and this led to their receptivity to sell part of their operations. Whether this trade agreement will lead to tangible service improvements for Digicel in PNG and other Pacific nations where it operates remains to be seen.

Meanwhile, the PNG parliament recently passed a tax, a variant of one originally included in the November budget, to be applied to companies with more than 40% market share in the banking and telecommunications sectors. The tax will apply to BSP Y digicel. BSP will have to pay K190 million per year, and the first payment is due on September 30, 2022. The tax on Digicel is K350 million only, with fair maturity one week after the bill was approved by parliament. The company did not pay on time and its executives have reportedly out of the country for fear of possible prison sentences for non-compliance.

Amalgamated Telecom Holdings (ATH), a public company listed on the South Pacific Stock Exchange in Fiji, has received funding from the Asian Development Bank to establish a new mobile phone network in png. Although I was supposed to begin offering services last year, operating as Vodafone either Digital, hasn’t done it yet. PNG’s offering would add to its mobile networks in American Samoa, Cook Islands, Fiji, Kiribati, Samoa and Vanuatu.

In September 2021, there were Telikom PNG outages in various parts of the country. Customers across PNG reported internet outages and the inability to make voice calls. At the time, the telecommunications company admitted that voice calls were down for more than half a day in the capital city, Port Moresby. Earlier this year, a main power cable was shot down by disgruntled villagers in Chimbu province, leading to power and internet outages across much of the highland region.

Meanwhile, the merger of Telikom PNG and bmobile continues. Although previous projected completion dates have passedfusion is reportedly close to completion. The two companies continue to sell their products separately, although Telikom ‘Rait Kads’ can now be used to add credit to bmobile devices and bmobile ‘Top Kads’ work on Telikom devices. the ICCC approved the merger in 2018. In addition, the government is considering the partial privatization of Telikom PNG, announcing possible interest from two large retirement funds.

Although there are many developments in the telecommunications sector in PNG, the main thing consumers want is reliable and affordable services. For the past two years, despite assurances that internet prices would come down, smartphone users have seen no real change in mobile internet data prices. We will be interested in determining whether the developments discussed here (the Digicel sale, the entry of ATH and the Telikom PNG/bmobile merger) have any impact on prices.

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This research was supported by the Pacific Research Program, with funding from the Ministry of Foreign Affairs and Trade. Opinions represent those of the authors only.

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