CUT/PASTE from the National Newspaper----17/10/06


Mobile phones are threat to Telikom PNG

Countries that make rapid economic progress are also those that are constantly implementing reforms to minimise red tape and make it easier for businesses to operate.
In Australia, this effort is led by the Council of Australian Governments, a body involving federal and state authorities.
Other countries have other ways of addressing ongoing reforms.
Reform is an exceptionally slow process in PNG with government-industry initiatives often taking some years to discuss and implement.
What this also means is that there is a lot of wastage and the ability to attract foreign direct investment is badly hampered.
However, in line with the discussions of the past two weeks, Bottom Line is taking this opportunity to explain why there are additional cost burdens that make Papua New Guinea uncompetitive in this era of globalisation.
One of the baseline issues is that of compensation.
When the government wants to build a road or some other kind of social infrastructure, it often has to cope with compensation claims, and these may not be one off in nature.
In effect, this means that infrastructure cannot be built at the equivalent cost of a similar project in some other country.
These extra costs reduce the ability of Government to provide improved services in a similar way to examples raised last week.
This week, Bottom Line wants to move on to another issue that is generally important for public confidence in government actions – this is the issue of transparency in the arena of policy making.
Bottom Line has in the past discussed the lack of transparency during the two failed attempts to privatise Telikom PNG.
In fact, as a member of a panel discussion on state-owned enterprises during the Australia-PNG Business Council meeting
in Cairns earlier this year, I offered the opinion
that Government treatment of telecommunications looked like “policy on the run”.
When that occurs, the process appears messy and outcomes are generally unsatisfactory.
At the time I questioned the wisdom of the Government’s decision to award two mobile phone licences next year – an action that has since been carried out – because of the debilitating impact this was likely to have on Telikom PNG.
One scenario is that the two operators could put Telikom virtually out of business by slicing away at their more lucrative markets, leaving Telikom to concentrate on loss-making activities.
Some sources have since indicated that the two mobile operators will be implementing 3G, or third generation technology, which Telstra introduced in Australia this past week.
Since 3G is incompatible with the present network in PNG, this bolsters my view that Telikom could be in for a rough time.
Ironically, at this stage, 3G makes little sense for PNG since the specially-made handsets will be prohibitively costly and will mainly be of interest to high income groups such as successful businessmen and politicians.
But these decisions have been made and we will see the likely impacts in the next year or two.
What has totally intrigued Bottom Line is the manner in which the two latest mobile phone licences were awarded in what the ICCC has described as a closed tender – only short listed companies were invited to bid.
The level of transparency in the bidding process has been as close to zero as you can get.
And why the ICCC, supposedly the industry regulator, has been involved in assessing the mobile phone bids and awarding the two licences has got me totally beaten.
The amounts of money it is claimed the mobile operators will spend in the coming years, and their apparent intention to reach more than two million people, sounds straight out of a fiction novel especially since they are starting from scratch.
Frankly, I have much more faith in the IPBC’s earlier privatisation efforts involving Steamships and its Fiji partner and the subsequent decision involving Econet.
It was clear that in both instances that the IPBC drove a hard bargain and gained the full respect of the bidding parties.
In either case, once implemented, the new 51% owners of Telikom could have seen the deal scrapped almost at any stage if either of them did not meet clearly laid out performance criteria.
From the information made public about the new mobile phone operators, Bottom Line is seriously concerned about whether these deals are in the national interest.
Because I happened to go to the Holiday Inn on the final day of the recent Media Expo, I happened to bump into two very senior Econet officials, who had flown to Port Moresby to see if they could find out why they were not successful in their mobile phone bid.
It became clear they had no idea why they lost and probably left the country in the same state of mind.
If a losing bidder was in this position, obviously the public has no hope of deciding if there was a fair outcome to this process.
Econet has arguably been one of the biggest mobile phone success stories on the African continent and has recently begun the process of raising finance for its proposed 3G network in New Zealand.
There is only one way now that some level of transparency could be assured.
This would happen if the Ombudsman Commission, in its wisdom, decides to take a look at the bidding process to assure the public the new licences were fairly fought over and won.
As far as telecommunications goes, one could say the reform process has been stalled since well before 2002. In the foreseeable future PNG will continue to remain among the worst service providers throughout the Asia Pacific.
PNG is worse off than all other regional countries for which data is available, except for the “basket” cases of Cambodia and Myanmar.
PNG has 12.6 telephone main lines per 1,000 people versus 2.4 for Cambodia and 5.7 for Myanmar. This contrasts with 199 for Malaysia, 32.3 for Indonesia, 34.6 for Vanuatu and 18.3 for Solomon Islands.