Much of the work completed to improve Papua New Guinea’s telecommunications sector will help increase connectivity and bring costs under control. The issue of new telecoms licences is set to increase competition, the recognition of so-called declared services will help prevent anti-competitive activity, and the separation of Telikom PNG’s retail and wholesale activities will help stimulate a more vibrant market. However, the creation of the National Transmission Network (NTN) will likely be the most important factor in transforming the sector. The NTN will provide access to more people, thus increasing the size of the market, and also ensure that the majority of the country – and most importantly Port Moresby – is connected to the high-speed international undersea cable that was previously serving only a small part of PNG.
PPC-1
The key to the project is the Pipe Pacific Cable (PPC-1), which runs from Sydney and Brisbane in Australia to Guam. It was built in 2008 to improve pricing on connectivity between Australia and the US, as Australia was previously limited to the Southern Cross Cable, which was built in 1998.
PPC-1 was connected to PNG at Madang in 2010 via an 80-km spur line and in 2012 the so-called missing line – a 300-km fibre connection between Madang and Lae – was completed, allowing PNG’s commercial centre to directly access the high-speed line to Guam and the world beyond. Up to that point, Lae’s primary route to the internet had been via a microwave system to Port Moresby, a system that had been installed in 2008 to replace a colonial era terrestrial link. The previous set up was far from ideal, as traffic would come overland via the unpredictable microwave connection and link up at Port Moresby to APNG-2, an aging copper link to Australia (a market that is itself already reaching capacity limits).
The idea behind the NTN is to bring all these pieces together and make sure that the nation is accessing its international gateways in an efficient and balanced way. PPC-1 makes landfall in a less-than-ideal place, and the NTN would ensure that the connection is used effectively. In the spring of 2014, Telikom PNG started building a microwave trunk line to connect Lae and Port Moresby, thus significantly improving the connection between the capital city and the Madang PPC-1 landing. The microwave link, which is being constructed at the cost of PGK53m ($21.5m), is expected to be finished by the end of 2014. It utilises the Aviat WMT 6000 trunking radio, which can handle data throughput of up to 3 GB per second, and is being built by Aviat Networks, a US-based company.
Stable Connection
But the real heart of the project is the creation of a fibre optic link between Lae and Port Moresby to connect the two in a more stable manner and, more importantly, to bring the capital city into direct fibre contact with the Madang landfall of PPC-1. This will involve a few stages of construction. The main leg of the project is a 700-km link that extends from the Hides gas field to the PNG liquefied natural gas (LNG) plant near Port Moresby, and after this the plant will be connected to Port Moresby by a 50-km link.
Meanwhile, a fibre optic line is being constructed from Lae to the Southern Highlands (where the Hides field is located), and once connected, this should complete the Lae-Port Moresby circuit and end dependence on the inconsistent microwave fix. The system, once up and running, will not only bring better connectivity to Port Moresby, but will also bring multiple levels of redundancy to the entire network. The capital city will be able to use PPC-1 and fall back on APNG-2 when necessary, while the two links to Lae will offer a backup route should one line – either the fibre or microwave – go down. The increased capacity may also allow much needed repairs to be made to APNG-2, thus further increasing capacity.
Major Potential
It is expected that the investment in the NTN will total PGK500m ($203.25m), though it is not exactly clear when full operations will be achieved. According to public comments made by telecoms executives in late 2013, the gas field to PNG LNG leg and the PNG LNG to Port Moresby leg should be finished in 2014, with most of the rest of the network completed in 2015. It is expected that the entire link will be finished sometime in 2016 or 2017.
The NTN is in part needed because of PNG’s poor positioning on the global undersea cable network. Due to history, economics and location, PNG’s links to the outside world are less than optimal. The country is not located in the way of a major line, such as Fiji and the Southern Cross Cable, and has historically lacked the wealth to justify its own direct line, such as the French Polynesia and the Honotua cable. As a result, it was left with two imperfect solutions: a used cable doubling back to a country that is itself far from other large global economies, and a link to a better cable, the PPC-1, but one that makes an inconvenient landfall. While all the countries of the Pacific region have been searching for connectivity solutions, PNG, despite being the largest and most populous of them, has not achieved better connections and, in many ways, is worse off than some of its neighbours, such as Fiji, New Caledonia, Samoa and French Polynesia.
Other Factors
As the NTN is being constructed, a number of other initiatives are also being pursued. PNG DataCo will hold and operate the assets of the NTN, and it is set to receive a number of major assets from Telikom PNG including domestic microwave, satellite and fibre optic lines; the two international gateways; fibre links to the international markets; PNG Power’s optic fibre connections; and a stake in the fibre linking the PNG LNG plant to Port Moresby.
The creation of PNG DataCo was designed to ensure that a rational market structure develops around the wholesale capacity it controls. The goal is to have the company act as an independent entity, dealing with all parties on an arms-length basis, thus creating a good environment for developing ICT capacity within the country and ensuring the optimal use of the international gateways. The creation of the firm, in addition to the construction of the Madang link and other efforts by the regulators, will help make the market more competitive by eliminating bottlenecks for both network structure and corporate structure.
NBN
Another development relevant to the NTN is the National Broadband Network (NBN). In 2013, the government published a National Broadband Policy that called for, among other things: 100% broadband coverage in urban areas, 30% coverage in rural areas and 50% coverage overall by 2018; the availability of affordable broadband; and high-speed internet in all urban schools. The plan also says that local content should be encouraged, it establishes a national broadband committee, and sets a floor on entry-level broadband, at 512 kbps in terms of download speed. While the policy commits to the market-driven development of national broadband, it says that affordability and universal access are priorities, and it therefore recognises the need to balance pure commercial interests with larger social interests. Specific goals mentioned in the press regarding the first stages of the NBN include 80,000 ADSL+ connections, 8000 100-mbps GB passive optical network connections, a high-speed broadband backbone and, eventually, 4G LTE services connected to the backbone. A wide variety of applications and services are also mentioned in the policy document including e-government, e-education, e-health and digital television.
Some Concerns
In 2013, PNG Telikom signed a $200m deal with China’s Huawei to help implement the NBN. Opposition politicians questioned the use of a Chinese contractor for the job, given that the firm would have access to and control over such key infrastructure. Concern has also been expressed that even with the sensible structuring of these initiatives, and the efforts being made to avoid concentration within the sector, the industry will remain dominated by a few players and that rates will remain high. For example, another significant agreement signed in November 2013 saw Sierra Support Services, which is owned by Digicel chairman Denis O’Brien, awarded with a $15m contract to build a new high-speed fibre optic network in the country.
Even with the forced separation of Telikom PNG’s wholesale and retailing operations, and despite the introduction of new players, consolidation is a tendency in telecoms globally and PNG is not likely to be an exception. Emmanuel Narokobi, owner of local firm Masalai Communications, for example, has written that “communications must not become a luxury to be afforded by a certain few” and calls upon regulators to be more proactive in terms of overseeing mergers within the sector. Another risk is that technology and private initiatives may leapfrog government-led initiatives to construct a platform for connectivity. “Expense is one thing, but if there is no more capacity, then there is no more capacity,” John Mangos, CEO of Digicel PNG, told OBG regarding PNG’s international connectivity. Already 4G LTE and satellite solutions are being developed by the private sector, and these can offer almost everything envisioned by the NTN.
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