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Internet access affordability in the Pacific Islands – November 2012 update

The lack of affordable broadband plans is reflected in the low level of broadband uptake. In most countries penetration is less than one subscription per 100 inhabitants…

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Recent developments in Internet services have enabled widespread access to information and resources throughout the world. In the Pacific Islands, the availability of Internet (particularly broadband) has expanded significantly over the last few years. Consequently, all countries in our analysis have either ADSL or fixed wireless broadband available (as shown in Exhibit 1). In fact, dial-up services are no longer available in some Pacific islands. However broadband Internet access is still relatively unaffordable in the Pacific Islands. While mobile Internet services are becoming available – in the Cook Islands, Fiji, Papua New Guinea, Samoa, Tonga and Vanuatu – 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 yes
Samoa yes yes yes
Solomon Islands yes yes yes
Tonga yes no yes
Vanuatu yes yes yes

Broadband penetration in the Pacific Islands is still very low, with only a few nations – Cook Islands, Fiji, Palau and Tonga – having more than one broadband subscription per 100 inhabitants. This is hardly surprising, as few consumers would be able to afford fixed broadband services. A low level of use (2GB per month) costs between USD21.10 in Fiji (equivalent to 5.3% of average monthly income) and USD475.45 in PNG (151% of average monthly income). Dial-up access is more affordable but can still represent a significant outlay, with 10 hours of access per month costing between USD8.99 in Samoa (2.4% of average monthly income) to USD69.81 in PNG (12.1% of average monthly income).

Analysis – dial-up Internet

For a low-level of dial-up use (10 hours or 250MB per month) the best prices are available from Samoan ISPs, while the highest prices are from PNG ISPs (Exhibit 2).

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

At a higher level of dial-up usage (30 hours or 750MB per month), the PNG ISPs are still the most expensive, while the Solomon Islands’ Our Telekom has the cheapest offering (Exhibit 3).

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 cost of dial-up Internet, while much lower than broadband, can still represent a significant burden for consumers. With the low level of use representing between 4% and 12% of average monthly income in most countries (except for Samoa), just 10 hours of usage a month is simply not affordable for many (Exhibit 4). And as usage increases, the service becomes even less affordable.

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

Country Low-level use
(10 hours or 250MB per month)
High-level use
(30 hours or 750MB per month)
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

While in most countries broadband is assumed to be services of at least 256kbit/s, “broadband” plans offered by Pacific operators can have speeds as low as 64kbit/s. We therefore examine monthly spend over all broadband plans, as well as plans with speeds of at least 256kbit/s.

Users in Niue have access to free non-commercial wireless Internet. For a low-level of broadband use (2GB per month) cheapest amongst the chargeable plans in the Pacific can be found in Fiji and FSM, while the most expensive are from PNG and one of the Samoan ISPs (Exhibit 5). In most cases, there is little or no premium for plans with speeds of at least 256kbit/s, with the exception of Palau, the Solomon Islands and Vanuatu.

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]

As usage increases, monthly spend also increases. For a high level of use (6GB per month), Niueans have access to free non-commercial services, with the cheapest of the chargeable services still being in Fiji and FSM (Exhibit 6). PNG ISPs and one of the Samoan ISPs are the most expensive.

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]

Operators in the Pacific Islands generally use three charging structures for broadband plans (Exhibit 7):

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

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 yes  
Kidanet Fiji     yes
TSKL Kiribati yes    
Palau Net Palau     yes
Datec PNG yes    
Daltron PNG yes    
Globe Internet PNG yes    
HiTron PNG yes    
NTAMAR RMI     yes
Bluesky Samoa yes    
Computer Services Samoa yes    
iPasifika Samoa yes    
Lesa Telephone Services Samoa yes    
Our Telekom Solomon Islands yes    
Kalianet Tonga yes    
Telecom Vanuatu Vanuatu     yes

As broadband is more expensive, clearly broadband services are less affordable than dial-up Internet, and are out of reach for many households. In only three countries – Cook Islands, Fiji and Niue – does a low usage broadband service represent less than 10% of average monthly income. As usage increases, broadband plans become less affordable, with plans in only Fiji and Niue costing less than 10% of average monthly income (Exhibit 8).

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

Country Low-level use (2GB per month) High-level use (6GB per month)
Cook Islands 4.1% 11.8%
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 14.5% 36.5%
Solomon Islands 123.8% 204.9%
Tonga 19.0% 35.4%
Vanuatu 24.6% 24.6%

The lack of affordable broadband plans is reflected in the low level of broadband uptake. In most countries penetration is less than one subscription per 100 inhabitants, and it is hardly surprising that the country with the least affordable broadband – PNG – has the lowest broadband penetration. On the other hand, we find that the Cook Islands has both the most affordable low-level broadband plans as well as the highest take-up of broadband services (Exhibit 9). This highlights the importance of affordability in improving the 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 November 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.

November 2012


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