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2012 Internet access affordability in the Pacific Islands

…there is still very low uptake of broadband in most of the countries (less than one subscription per 100 inhabitants), with the country with the least affordable broadband having the lowest broadband penetration…

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The availability of broadband in the Pacific Islands has extended since we considered Internet affordability in the Pacific Islands in 2009, so that all the countries we have analysed have either ADSL or fixed wireless broadband services available in at least some population centres (Exhibit 1). In fact some of the countries no longer have dial-up services available. However Internet access, broadband in particular, is still relatively unaffordable in the Pacific Islands.

Note that some of these countries also have mobile Internet services available (Cook Islands, Fiji, Papua New Guinea, Samoa, Tonga and Vanuatu), however as yet there is insufficient data available to include these in our analysis.

Exhibit 1: Internet availability in various Pacific Island countries [Source: operator websites]

Country Dial-up ADSL broadband Fixed wireless broadband
Cook Islands no yes no
Federated States of Micronesia (FSM) yes yes no
Fiji no yes yes
Kiribati no no yes
Niue no no yes
Palau yes yes no
Papua New Guinea (PNG) yes yes yes
Republic of the Marshall Islands (RMI) yes yes no
Samoa yes yes yes
Solomon Islands yes yes yes
Tonga yes no yes
Vanuatu yes yes yes

Low dial-up usage of 10 hours per month will cost from between USD8.99 per month in Samoa, to USD69.81 in PNG. Compared to average monthly income, dial-up access requires between 2.4% of monthly income in Samoa, and 12.1% in PNG.

Fixed broadband is considerably more expensive than dial-up in Pacific Islands countries, with low-level use of 2GB per month costing between USD21.10 in Fiji and USD475.45 in PNG. This corresponds to 5.3% of average monthly income in Fiji and 150.9% in PNG. It is not surprising then, that broadband penetration in the Pacific Islands is still particularly low, with only four countries (Cook Islands, Fiji, Palau and Tonga) having more than one broadband subscription per 100 inhabitants.

Analysis – dial-up Internet

The monthly spend on dial-up Internet access for low-level use (10 hours per month) is shown in Exhibit 2. Note that most operators charge for dial-up access by time, however, Datec and Daltron in PNG charge by megabyte (MB). To calculate the monthly spend in these instances we have calculated how much data could be downloaded in 10 hours at dial-up speeds (250MB) and assumed this amount of data was consumed over the month. Another variation in the dial-up Internet charging structure is NTA's offering in RMI and Our Telekom’s in the Solomon Islands, with a single flat monthly fee for dial-up use. Subscribers of two of the three operators in Samoa have the lowest monthly spends for low-level dial-up use, whereas subscribers of two of the three operators in PNG have the highest monthly spends.

Exhibit 2: Monthly spend on dial-up Internet access for low-level use (USD at purchasing power parity rates) [Source: Network Strategies]
Monthly spend on dial-up Internet access for low-level use. Source: Network Strategies

The monthly spends for high-level dial-up Internet use (30 hours or 750MB per month) are shown in Exhibit 3. For this level of use customers of Our Telekom in the Solomon Islands have the lowest monthly spends whereas customers of two of the three PNG operators have the highest monthly spends.

Exhibit 3: Monthly spend on dial-up Internet access for high-level use (USD at purchasing power parity rates) [Source: Network Strategies]
Monthly spend on dial-up Internet access for high-level use. Source: Network Strategies.

The affordability of dial-up Internet access is shown in Exhibit 4, where affordability is calculated as the monthly spend as a percentage of average monthly income. In this analysis, GDP per capita divided by 12 is used as a proxy for monthly income. Dial-up Internet access for low-level use requires less than 13% of average monthly income for all countries, with only PNG requiring more than 10% of income for this level of usage. For high-level use up to 26% of monthly income is required in Vanuatu, although in five of the eight countries, less than 8% of monthly income is required.

Exhibit 4: Monthly spend on dial-up Internet access as a proportion of average monthly income [Source: Network Strategies]

Country Low-level use High-level use
Federated States of Micronesia (FSM) 8.4% 18.9%
Palau 4.1% 6.9%
Papua New Guinea (PNG) 12.1% 12.1%
Republic of the Marshall Islands (RMI) 7.6% 7.6%
Samoa 2.4% 6.3%
Solomon Islands 4.7% 4.7%
Tonga 6.7% 6.7%
Vanuatu 9.5% 26.0%

Analysis – broadband

The monthly spends on broadband Internet services for low-level use (2GB usage per month) are shown in Exhibit 5. Some of the broadband plans offered in the Pacific Islands have speeds little higher than dial-up (starting at 64kbit/s in some countries), so we have included two monthly spends, one for plans of any speed, and one only for plans with speeds of at least 256kbit/s. Users in Niue have the lowest monthly spend due to the offer of free non-commercial wireless Internet by the Internet User’s Society Niue. The next lowest monthly spends are for services from the three operators in Fiji, whereas the highest monthly spends are associated with services in PNG, along with one service from Samoa. In most cases the monthly spend for 256kbit/s broadband is not significantly higher than the minimum speed, however, in Palau, the Solomon Islands and Vanuatu there is a large jump in monthly spend with subscribers in Palau suddenly having the highest monthly spend of all. Note that prices for Telecom Cook Islands are for Rarotonga only; Internet is available on all inhabited islands, but at a higher cost.

Exhibit 5: Monthly spend on broadband Internet access for low-level use (USD at purchasing power parity rates) [Source: Network Strategies]
Monthly spend on broadband Internet access for low-level use [Source: Network Strategies]

Monthly spend on broadband Internet access for high-level use (6GB per month) is shown in Exhibit 6. Once again users in Niue have a monthly spend of zero, with the next lowest monthly spends being for customers of the operators in Fiji and FSMTC in FSM. The highest monthly spends are again incurred by users in PNG and customers of one of the Samoan operators.

Exhibit 6: Monthly spend on broadband Internet access for high-level use (USD at purchasing power parity rates) [Source: Network Strategies]
Monthly spend on broadband Internet access for high-level use [Source: Network Strategies]

There are three typical charging structures for broadband plans in Pacific Islands, with data caps (quotas being placed on data volumes downloaded) being a relatively common feature:

  • pay for a data cap with an additional cost per excess MB used
  • pay for a data cap, then have the connection speed throttled (reduced to a lower speed) when that cap is exceeded
  • pay for speed of connection with no data cap.

The Internet Service Providers (ISPs) that we analysed and their broadband charging structures are summarised in Exhibit 7. Note that Globe Internet in Papua New Guinea has a fee structure where there is a fee for a data cap with an excess charge, with an additional monthly fee that varies by speed of connection.

Exhibit 7: Pricing structures for broadband plans [Source: operator websites]

ISP Country Data cap with excess Data cap and throttled No data cap, fee varies by speed
Oyster Cook Islands yes    
FSMTC FSM     yes
Connect Fiji   yes  
Unwired Fiji   yes  
Kidanet Fiji     yes
TSKL Kiribati yes    
Palau Net Palau     yes
Datec PNG yes    
Daltron PNG yes    
Globe Internet PNG yes   yes
HiTron PNG yes    
NTAMAR RMI     yes
Computer Services Samoa yes    
iPasifika Samoa yes    
Lesa Telephone Services Samoa yes    
Our Telekom Solomon Islands     yes
Kalianet Tonga yes    
Telecom Vanuatu     yes

Affordability of broadband Internet access has been calculated in the same manner as for dial-up access above. The affordability figures are based on the cheapest Internet plan with any speed. With the exception of Niue, broadband Internet access is less affordable than dial-up, with low-level use requiring from 5.3% of average monthly income in Fiji, up to 151% in PNG. Broadband services can be seen to still be relatively unaffordable, even for low-level use, with only two countries requiring less than 10% of monthly income, and most requiring over 20%. For high-level use, only Fijian services require less than 10% of monthly income, and services in PNG require 417%.

Exhibit 8: Monthly spend on broadband Internet access as a proportion of average monthly income [Source: Network Strategies]

Country Low-level
use
High-level use
Cook Islands 8.0% 22.3%
Federated States of Micronesia (FSM) 13.9% 13.9%
Fiji 5.3% 6.1%
Kiribati 42.2% 98.4%
Niue 0.0% 0.0%
Palau 27.5% 27.5%
Papua New Guinea (PNG) 150.9% 416.5%
Republic of the Marshall Islands (RMI) 18.9% 18.9%
Samoa 21.8% 84.2%
Solomon Islands 85.5% 85.5%
Tonga 19.0% 35.4%
Vanuatu 24.6% 24.6%

We have compared the fixed broadband penetration figures with the affordability of broadband for low-level use calculated above (Exhibit 9). We can see that there is still very low uptake of broadband in most of the countries (less than one subscription per 100 inhabitants), with the country with the least affordable broadband having the lowest broadband penetration and the two countries with the most affordable broadband having the highest broadband penetration (note broadband penetration figures for Niue were not available from the ITU). This is not an unexpected result and highlights the importance of affordability of services in improving uptake of broadband in the Pacific Island countries.

Exhibit 9: Fixed broadband penetration compared to affordability for low-level use [Source: ITU, Network Strategies]
Fixed broadband penetration compared to affordability for low-level use [Source: Network Strategies]

 

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 2011 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 May 2012.
  • The prices for each operator represent the plan resulting in the lowest monthly spend.
  • OECD Internet 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 2011.

August 2012


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