The laying of two subsea fibre-optic cables – one international and one domestic – are among the recent and promising ICT developments in Papua New Guinea. There is optimism that these will help expand access and reduce costs in rural areas, which are home to over 80% of the country’s 8.6m-strong population. Meanwhile, it remains to be seen whether the restructuring of state-owned ICT assets will further help reduce costs and improve service delivery.
To keep pace with these developments, moves have been made to enhance data protection and cybersecurity, improve quality and pricing, and guide the progress of PNG’s digital networks. The government has also prioritised digital literacy and the upskilling of personnel to equip the country with a workforce capable of adapting to an increasingly digital world. These efforts will help PNG better capitalise on improved ICT infrastructure and leverage technological advancements for the benefit of the wider economy.
Oversight
The ICT sector was highlighted as a priority in the PNG Development Strategic Plan 2010-30, which includes targets to increase mobile internet, television and radio penetration to 80%, 70% and 100%, respectively. The National Information and Communications Technology Authority (NICTA) is tasked with implementing the goals established in the plan, as well as providing oversight. Its responsibilities include establishing benchmark interconnection rates; issuing radio, broadcast and internet licences; and monitoring compliance with quality standards. NICTA receives a mix of licence, spectrum and regulatory fees, as well as a percentage of turnover from operators. Meanwhile, ICT service operators receive subsidies deducted from their combined revenues and World Bank funding to help reach coverage targets.
ICT has been covered by a quality assurance framework since 2011. Stipulations include a call drop-out rate of not more than 2%, a call failure rate due to network congestion of under 2%, and time limits for network repairs. Also included is a network availability rate of 99.99% in medium and large centres, and 98% in specified administrative districts and localities.
However, NICTA has not monitored licencees’ quality of service as outlined in the regulation. To address this, in August 2019 NICTA proposed draft rules that would enable the authority to highlight to customers performance comparisons between service providers, and provide NICTA with points of reference for assessing and comparing quality of service. As of June 2020 NICTA was still in consultations with stakeholders regarding the finalisation of the new regulations.
Fixed Line
The overwhelming majority of internet users in PNG are urbanised and young. Over two-thirds of internet users in 2018 were based in Port Moresby and Lae, according to GSMA, a London-based trade institution that represents operators around the world. At that time, 48% of users were between 18 and 24 years of age, and 82% were under the age of 34.
Fixed-line penetration remains relatively low: in 2018 1.9% of the country’s population had a subscription from the sole provider, Telikom PNG, according to the International Telecommunication Union (ITU). With only around 12% of the population having access to the national grid, a reliable electricity supply is a hurdle to widening fixed-line penetration in particular. However, efforts are under way to address this. The PNG Electrification Partnership announced in November 2018 targets expanding the electrification rate from 13% that year to 70% by 2030, with the support of the US, Australia, New Zealand and Japan (see Energy chapter).
The performance of the country’s networks fluctuated in recent months, according to the Speedtest Global Index compiled by Ookla, an internet testing and analysis firm. Between April 2019 and April 2020 measurements of fixed broadband download speeds ranged from a peak of 10.5 Mbps in September 2019 to a low of 6.3 Mbps in January 2020. In April 2020, the latest month for which data is available, download speeds settled in at 6.8 Mbps. That month PNG’s fixedline internet speed ranked 165th out of 174 countries.
Operators
PNG has two primary mobile operators: Digicel and Bmobile (a subsidiary of Vodafone). Digicel is the most popular operator, with 92% of the market share in 2018, according to GSMA. Bmobile had a 5.5% market share and Citifon, which was commonly known as Telikom but closed its operations, had a 2.5% share.
Digicel’s share of the urban market is considerably lower, however, at around 60%; the Caribbean-headquartered network covers a higher portion of the national market because it is the only provider in some unprofitable remote areas. The costs of repairs and maintenance of cell towers in remote areas is high: they are vulnerable to vandalism – including the removal of expensive cell tower solar panels – and helicopters are required to undertake the necessary works.
Mobile Market
In 2017 there were 47.6 mobile subscriptions per 100 people in PNG, up significantly from 1.5 per 100 people in 2006, according to the most recent data available from the World Bank. However, this number is expected to fall in 2020 due to a mandatory registration of SIM cards implemented after the 2016 passage of the Cybercrime Act. While registration was to be finalised by March 2019, it fell behind schedule, and in January 2020 NICTA began to deactivate unregistered accounts.
Prepaid connections account for over 76.2% of PNG’s mobile market, according to a 2019 report from GSMA. Around 67.5% of the population lived in an area covered by mobile services, and 40.9% lived in an area with 3G coverage. The report also found that there were 599,285 smartphones in the country, with 21.9% of total mobile connections provided by smartphones.
The expansion of mobile usage rates has notable potential to improve the overall performance of PNG’s economy, according to the World Bank. The international finance institution estimated in a 2017 report that accelerating mobile penetration could generate over $5bn in additional GDP across the Pacific region by 2040, as well as create 300,000 additional jobs. The report noted that PNG in particular was well positioned to benefit from such a development, given the sizeable room for widening penetration and productivity in the country. The report suggests that PNG’s ICT sector’s real GDP could grow around 0.2% per year between 2015 and 2040, with trickle-down annual gains of almost 0.6% for the wider economy.
Restructuring
In April 2017 Telikom PNG, Bmobile and wholesale ICT service provider PNG DataCo agreed to a merger, with a restructuring beginning in April 2019 when the Independent Consumer and Competition Commission approved the transfer of all shares to Kumul Telikom Holdings (KTH). The merger is expected to create a more efficient company that can provide affordable and reliable services, from wholesale and retail mobile to fixed line. As well as combining the three companies’ assets and their employees, the final company will include two retail businesses, one fixedline business and one mobile business. Also part of the restructuring efforts, the government announced in April 2018 that Bmobile would absorb Telikom’s 4G services and around 400 of its base stations, almost tripling the company’s previous total number of stations. At the same time, Bmobile migrated value-added services from its 2G and 3G networks to its 4G subscribers.
In October 2019 the restructuring agreement was challenged by PNG Communication Workers Union, which threatened industrial action including a stopwork protest, according to local media. The union argued for replacement of the current KTH board members, as well as the return of the 4G LTE mobile services from Bmobile to Telikom, which they hoped would raise Telikom’s revenue base and enable the reinstatement of five of the company’s terminated employees. This was part of a larger court battle regarding redundancies that had been ongoing between the union and KTH since 2015, until at the end of December 2019 the Supreme Court ordered the groups to reach an out-of-court compromise.
Other merger and acquisition activity includes a $13.3m deal in July 2019 that enabled Fiji-based Amalgamated Telecom Holdings (ATH), through its subsidiary ATH International Venture, to acquire a 70% stake in Digitec Group, which is active in PNG, Singapore and Australia. ATH owns 100% of Telecom Fiji and Vodafone Fiji, and announced in November 2019 that it would issue new shares to existing shareholders in order to raise $120m worth of financing for projects in PNG.
Mobile Internet
Mobile coverage statistics paint a more positive picture compared to fixed-line internet. In 2018 over 80% of PNG’s population had access to mobile internet through a combination of 2G, 3G and 4G LTE networks, according to data from Digicel. Just over half, or 55.5%, of the market is made up of 2G connections, according a March 2019 report from GSMA, while 3G and 4G held a roughly equal share of the remainder. In an effort to further improve mobile internet coverage, Bmobile signed a memorandum of understanding with Huawei PNG in December 2019 to trial 5G technology early the following year. However, these plans were stalled due to the Covid-19 pandemic and concerns surrounding the health effects of 5G.
The proportion of internet users in PNG increased slightly over the latter half of 2019. Penetration rose from 11.2% in June 2019, when fewer than 963,000 people were connected, to 12.8% six months later, when there were just under 1.1m internet users country-wide.
Sea Cable System
The Coral Sea Cable System (CSCS) went live in February 2020, connecting Port Moresby – as well as Honiara, the capital of Solomon Islands – to Sydney. The 4700-km submarine cable, backed by the Australian government but majority-owned by the governments of PNG and Solomon Islands, expanded capacity by 20 Tbps. The fibre-optic cable also includes repeaters to accommodate high bandwidth and reinforced protection against external shocks resulting from PNG’s position on the Pacific Ring of Fire, which makes it vulnerable to natural disasters.
Kumul
The ability of smaller internet service providers (ISPs) to compete with large operators was enhanced not only with the finalisation of the CSCS, but also with the laying of a new domestic cable. The first stage of the Kumul Submarine Cable Network, developed by Huawei, was completed in February 2019 to connect Port Moresby to Madang, via Alotau, Popondetta and Lae. The management, operation and maintenance of the cable as part of the National Transmission Network falls to DataCo, although internet service providers are responsible for building the last mile of their networks.
The fibre-optic latency of the new cable lies between 60-80 milliseconds, which enables the operation of a wider array of services. Leveraging this opportunity, three new localised ISPs had emerged by July 2019. The total number of ISPs stood at 59 by August of that year, according to a 2019 report from NICTA.
There have been questions raised by industry players regarding how far DataCo would be able to go in terms of reducing costs for operators, given that the company must not only cover the costs of operation and maintenance, but also must repay a $200m loan to Huawei for the installation of the cable. Moreover, there were concerns that the high cost of establishing lastmile networks may prevent lower costs for wholesale services from being passed down to consumers. “While NICTA has made assurances that it will retain constant wholesale pricing for domestic data services, more certainty is needed to boost confidence in the market,” Athula Biyanwila, group CEO for PNG & Solomon Islands at Bmobile, told OBG.
Following the infrastructure improvements, however, Telikom PNG reduced prices for data bundles by as much as 80% in July 2019, and Bmobile reduced retail prices for both data and fixed broadband by the same margin. Lower prices were followed by a threefold increase in traffic, leading to capacity expansion. These improvements were especially important in light of the global Covid-19 pandemic, which further accelerated demand as individuals adopted social-distancing measures, and shifted to working and studying from home.
The second and final stage of the Kumul Submarine Cable Network was completed by mid-2020, connecting Jayapura in Indonesia to Arawa in Bougainville via branches and data centres in seven coastal cities. In March of that year the fibre-optic cable extended into Vanimo, Wewak and Lorengau, before continuing to Madang, Kimbe and Kavieng the next month. By May the network passed through Kokopo to its terminal in Arawa. It is hoped that this expansion will facilitate wider internet access in remote regions.
Digital Technology
Improving ICT infrastructure will open up further opportunities for digital growth. “Logistics, manufacturing, and banking and finance are among the sectors best positioned to benefit from wider access and enhanced service provision,” Gokul Naidu, then-COO of ICT solutions provider Datec, told OBG. “The manufacturing industry is also in a strong position, particularly multinational firms that will be able to operate more efficiently as ICT services mature.”
Enhancing financial inclusion is paramount, with an estimated two-thirds of the population excluded from formal financial services. Given that the vast majority of PNG citizens resides in rural areas, where it is often difficult to access brick-and-mortar banking institutions, widening the use of digital financial services and improving digital literacy could be an efficient strategy to increase financial access to the unbanked.
Security
A skilled ICT workforce will be key to ensuring that online operations are conducted in a secure environment. PNG’s cybersecurity landscape benefitted from the launch of the National Cyber Security Centre in Port Moresby in November 2018, jointly funded by the governments of PNG and Australia. The centre was created to protect ICT infrastructure and digital assets related to the 2018 APEC summit held in PNG as part of a three-year agreement between the two countries to develop a cybersecurity framework that includes financing to train ICT workers.
In addition to the installation of new data centres along the Kumul Submarine Cable Network, private players have also taken steps to improve data management and upgrade their cloud services provision. Datec, for example, upgraded its data centres to provide cloud solutions and services, while enhancing cybersecurity, and widening training and educational services. These improvements are set to make PNG’s cloud environment more appealing for government users, as well as the financial and retail sectors. As another step towards assuring greater data privacy and security in PNG, a digital identification scheme, YuTru, was announced in March 2019, to be led by the private sector in collaboration with the central bank.
Disruption
While it remains to be seen how far the economic effects of the Covid-19 pandemic will impact PNG’s ICT sector in the long term, the segment may be less vulnerable than other areas of the economy. The impact of social distancing on ICT is reflected by increased network demands, alongside wider use of electronic and mobile top-up services.
However, while Bmobile’s Biyanwila told OBG in May 2020 that the company had successfully sustained revenues, even in the face of the pandemic, he noted that he anticipated the economic slowdown to lead to a decline in year-end revenues. “The success of PNG’s ICT sector as we enter the recovery phase will depend to a large extent on an effective government support plan,” he said. “The segment, like any other, is vulnerable to the fallout of the domestic and global economy, and we have already witnessed a reduction of salaries in some companies since the economy began to reopen.”
Outlook
PNG’s ICT sector benefitted from infrastructure developments in 2020, after finalising international and domestic subsea fibre-optic cable links. This was followed by a reduction in costs and increased network demands, although it remains to be seen how far these will lower costs and boost provision in rural areas. There is room for clearer guidance to accelerate the uptake of ICT services through enhanced digital literacy, human capital development and greater assurance of digital security. These efforts could help PNG to fully realise the benefits of improved ICT infrastructure.
