2011 Pacific Island mobile market update
the perceived cheapness of prepaid plans is not always accurate as in several cases we found that a postpaid plan would be cheaper than a prepaid one
Want to know more about this topic? Contact the author Nina Matthews
See our updated analysis of the rates as at March 2012.
In this years update of mobile affordability in the Pacific Islands we are using a brand new set of user profiles in our comparisons, which should be much more representative of personal mobile usage in the Pacific. The OECD released an updated series of mobile usage baskets during 2010, which included a usage profile considered to be that of a typical prepaid user, and a profile based on SMS usage with very little voice use. We have compared mobile tariffs in the countries by calculating the average monthly spend for customers with low-volume, typical prepaid and SMS-based usage. We have also measured the affordability of mobile services in the Pacific Island countries, calculated as the average monthly spend on mobile services for each usage level as a percentage of the average monthly income (calculated as the GDP per capita divided by 12).
Using the new usage profiles we have made a couple of notable findings. First, the perceived cheapness of prepaid plans is not always accurate, as in several cases we found that a postpaid plan would be cheaper than a prepaid one for a customer with a usage profile considered to be typical of a prepaid user. Secondly, the monthly spend for an SMS-based user would greatly benefit from the addition of bulk text message allowances, such as is currently offered by Telecom Cook Islands. Note that there have been no changes in competition status in the Pacific Islands since our last update, however Nauru now has its first mobile operator and has been added to our analysis. We have still not been able to include Bemobile in the Solomon Islands in our analysis due to lack of data.
The cheapest plans for each operator, and the resulting monthly spend for a low volume user (one who makes 30 calls and sends 100 text messages per month), are illustrated in Exhibit 1. There is still a large variation between monthly spends in the various Pacific Island countries for low-volume use, with competitive operators in Tonga, Fiji and Samoa still having some of the cheapest prices, along with the monopoly operator in the Federated States of Micronesia. The monopoly operators in Marshall Islands and Cook Islands, along with the competitive operators in Papua New Guinea still have the highest prices for this level of use. Note that as the definition of the OECDs low usage basket has changed, these results are not comparable to those of our previous analysis in September 2010.
Similarly the monthly spend for a typical prepaid user (someone on a prepaid plan who makes 40 calls and sends 60 text messages per month) is illustrated in Exhibit 2. This comparison has shown that although prepaid plans have the perception of being cheaper, with this level of usage a postpaid plan would sometimes provide better value for money. We found this to be the case for Telecom Cook Islands, Digicel Fiji, PNCC Palau and Digicel Vanuatu.
The monthly spend for an SMS-based user (someone who makes 8 calls and sends 400 text messages per month) is illustrated in Exhibit 3. The most notable finding here is that Telecom Cook Islands becomes the cheapest operator for a user who mainly uses their phone for text messaging. This is due to a bulk text offering which is unique among Pacific Island operators, whereby a customer pays for the first 20 text messages sent per month, then gets up to 450 additional messages for free, to be used within the same month.
We have also updated the calculation of mobile affordability in the sample countries. To measure this we calculated the percentage of average monthly income that is taken up by the monthly spends calculated. These percentages are illustrated in Exhibit 4. For a low volume user, in most countries the monthly spend represents less than 10% of monthly income, with the highest spend being 21.8% in Papua New Guinea and the lowest being 3.3% in Palau. For typical prepaid users, the monthly spend also represents less than 10% of income for most countries, with the highest being 22.6% in Papua New Guinea and the lowest being 3.9% in Tonga. The percentage of average monthly income spent on mobile usage for an SMS-based user ranges from 1.8% in Cook Islands, to 35.8% in Papua New Guinea, with the majority of countries requiring less than 20%.
|Federated States of Micronesia||5.2%||6.0%||9.2%|
|Papua New Guinea||21.8%||22.6%||35.8%|
|Republic of the Marshall Islands||12.9%||13.2%||15.8%|
Over the past year there has been some expansion of mobile coverage in Papua New Guinea and the Cook Islands. However network coverage is still limited in some Pacific Island countries:
- Cook Islands: coverage is provided to Rarotonga, Aitutaki, Mangaia and Manihiki islands.
- Federated States of Micronesia: coverage is provided to town areas of Kosrae, Pohnpei, Yap and Chuuk islands. Note: higher charges apply for calls between states.
- Fiji: both Vodafone and Digicel provide coverage to the coastal areas of the two main islands (Viti Levu and Vanua Levu), as well as most of the inner islands and some of Kadavu Island. Digicel also provides coverage to the Yasawas, Lakeba and part of Gau.
- Kiribati: coverage is provided to South Tarawa, Kiritimati Island and some parts of North Tarawa.
- Nauru: Digicel provides coverage to the entire island.
- Palau: Palau Mobile provides coverage to the main populated areas of Babeldoab Island and the state of Koror. PNCC provides coverage throughout Palau.
- Papua New Guinea: Pacific Mobile provides coverage to Wewak, Madang, Mt Hagen, Goroka, Lae and Port Moresby. Digicel currently provides coverage to Port Moresby and the provinces of Central, Morobe, Madang, Chimbu, Eastern Highlands, Western Highlands, Milne Bay, East New Britain, New Ireland, Western and the autonomous region of Bougainville. Coverage is also provided by Digicel in parts of East Sepik, Sandaun, Manus, Enga, Ora, Gulf, West New Britain and Southern Highlands.
- Republic of the Marshall Islands: coverage is provided to Majuro, Jaluit, Kili, Rongelap and Wotje.
- Samoa: Digicel provides service to the coastal regions of the two main islands (Savaii and Upolu), covering at least 80% of the population. Samoatel does not give details of its coverage on its website.
- Solomon Islands: coverage is provided to several regions in the Western, Choiseul, Malaita, Isabel, Central, Makira, Renbel and Guadalcanal Provinces.
- Tonga: both Digicel and TCC provide coverage to Tongatapu, and areas of the island groups of Eua, Vavau and Haapai. Note: higher charges apply for calls to outer islands.
- Vanuatu: Telecom Vanuatu provides coverage to areas in Santo, Ambae, Maewo, Malekula and Efate islands. Digicel provides coverage to areas in Santo, Malekula, Ambae, Maewo, Pentecost, Ambrym, Epi, Efate, Erromango and Tanna.
Notes for analysis of monthly spend:
- Prices include GST (at the rate relevant to that country) and are in US dollars.
- All prices were converted to US dollars using 2008 Purchasing Power Parity (PPP) rates sourced from the World Bank, where available, with the remaining PPP rates sourced from the World Health Organisation.
- All plans were current as at 31 March 2011.
- The prices for each operator represent the plan resulting in the lowest monthly spend.
- OECD mobile baskets of usage were sourced from the report: Revision of the methodology for constructing telecommunications price baskets, 18 March 2010.
- GDP per capita data were sourced from the World Bank for 2009.
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