New exchange may see internet costs in Papua New Guinea fall, says analyst

While a consultancy’s report has shown that internet costs in Papua New Guinea are amongst the highest in the world, prices are falling. Encouragingly, an agreement announced this week could see internet costs fall even further.

An optical fibre patch panel at an Internet Exchange. Credit: CC BY-SA 3.0

An optical fibre patch panel at an Internet Exchange. Credit: CC BY-SA 3.0

The country’s major internet service providers (ISPs) have agreed to establish a Neutral Internet Exchange Point (IXP) facility in Port Moresby, according to the ICT regulator, the National Information and Communication Technology Authority (NICTA).

NICTA's Charles Punaha

NICTA’s Charles Punaha

NICTA CEO Charles Punaha told a media conference in Port Moresby that bmobile-Vodafone, Telikom PNG and Digicel will share the K200,000 (US$62,000) cost of the exchange and he was hopeful that Google would also join the venture.

Punaha reportedly said that the cost of internet services could fall by up to 90 per cent. He said it would be completed by December.

The new exchange will increase speed, reliability and cut internet charges in PNG, which are among the highest in the world according to a report prepared for the National Research Institute by Deloitte.

A big deal

Telecommunications analyst Henry Lancaster tells Business Advantage PNG a new IXP (internet exchange point) in developing countries is ‘a big deal’.

The key benefit of an IXP is that local data traffic is distributed locally rather than being sent to an IXP abroad and then back again, which creates additional latency (delays), as well as greater transit costs.

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‘A ball park figure is 15-25 per cent savings.’

‘A local IXP makes the entire traffic switching process much more efficient,’ says Lancaster. ‘International traffic is still separated out from local traffic and obviously is routed over international networks and back again.’

The move is likely to be good for local business, as Lancaster explains:

‘Local IXPs are also often touted as business generators, since they provide a hub for local businesses: web hosting, domain name servers, content development and so on.

‘However, the real force for reducing end-user pricing is greater international bandwidth.’

BuddeComm's Henry Lancaster

BuddeComm’s Henry Lancaster

Lancaster says as well as improving speeds, a local IXP will reduce costs. ‘A ball park figure is 15–25 per cent savings,’ he says.

Given the high cost of internet access in PNG (see table below), a 25 per cent reduction would be welcomed by businesses and consumers.

Report highlights costs

The recently-released Deloitte report notes that PNG’s cost-per-gigabyte of data is many times that of developed countries.

The report says, with internet costs at around 10–20 per cent of average monthly incomes, access is out of the reach of the majority of PNG citizens.

‘Among the more ‘unusual’ costs imposed on the wholesaler, Telikom PNG, is forced payment for the maintenance costs of the entire 7,000 km stretch of the cable from Sydney to Guam, not just the 80 km local ‘spur’.’

The International Telecommunications Union (ITU) estimates that for a country to achieve ‘a rapid uptake’ of internet use, the cost needs to be no more than three to five per cent of average monthly incomes.

Currently, less than 10 per cent of the population in PNG has internet access.

Maintenance and reliability

Among the more ‘unusual’ costs identified by the report, Telikom PNG is required to pay for the maintenance costs of the entire 7,000 km stretch of the cable from Sydney to Guam, not just the 80 km local ‘spur’. Cable owner, TPG of Australia gave no reason to Deloitte for this charging structure.

Maintenance costs within PNG are also high, notes the report. The lack of a national road network often means that what might be routine maintenance tasks in some parts of the world become a major exercise in PNG, involving the leasing of helicopters, dedicated security staff, and often the hiring of specialists who need to be brought in from overseas.

Reliability issues mean that businesses use more than one ISP in case one of them goes down.

This duplicates costs, but is necessary because outages ‘are extremely common, often occurring as frequently as once or twice a week’, the Deloitte report notes.

Current internet costs in the Pacific

PNG

The following data costs are indicative only and are taken from advertised rates. We have attempted to compare apples with apples, but costs vary according to, for example, whether the data is part of a bundle, or if fibre cable is used or Ob3 satellite and C-Band backup is used. 

Digicel                         5 GB K299

Bmobile/vodafone    5 GB K225

Telikom                       5 GB K249

Speedcast                    5 GB K260 (email response)

Datec                           4 GB K349

Global                          5 GB K1,000

Fiji

Vodafone                     6 GB        K123.90 (F80.56) Bundled

Digicel                         4 GB        K294.38  (F191.40)

Vanuatu

Digicel                         8 GB K471 (V16,000)

Telecom                      unlimited K293 (V9950)

Solomon Islands

Bmobile                       1 GB K50 ($SI 120)

Our Telekom               1 GB 207 ($SI 500)

 

Comments

  1. Chris Smith says:

    Would have been good to see comparisons with US, UK etc
    In Thailand K100 lasts about 2 months almost every day usage

  2. Yeah! Great. About time,..

  3. This is a welcome news. I use Vodafone for my internet usage which is competitive and comparable to the other ISPs.
    When this is implemented it will really save me huge monies for the bundles.
    Please can this be fast tracked before I loose more to the ISP.

    Cheers.

  4. Long time coming mate. It’s a relief for majority of the businesses and ordinary people alike.
    All I’m saying is ; Our people deserve it so bring it on.

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