On Wednesday of this week, Minister Edward Nipake Natapei and Australian High Commissioner John Pilbeam jointly announced the creation of a telecommunications Universal Access Fund. Designed to ensure that communications services reach all parts of Vanuatu, the fund was rolled out with an initial contribution from AusAID of 215 million vatu.
The idea is to allow market forces to work in the vast majority of the country, providing mobile telephone services on a for-profit basis. Digicel’s license terms state that it must make its service available to 85% of the population.
Mobile telephone service costs are tiny compared to traditional land lines. Infrastructure is minimal, and it’s not as susceptible to damage by the elements. Digicel is confident that it can profitably provide services over such a wide area. They’re so confident that they’ve ponied up a significant chunk of cash as a performance bond.
In time we’ll see TVL and smaller, ‘boutique’ operators entering these once marginal markets as well. But there will always be areas in Vanuatu that simply can’t be serviced profitably. This is where government enters the scene. They’ve designated a basket of money that will ensure that everyone from Aneityum to the Torres islands has access to mobile phone services.
It’s not yet been decided how this fund will be administered. Options on the table include a ‘best services’ scenario, in which providers compete to offer the highest level of service for a fixed price, and a ‘lowest cost’ scheme, which would open service provision to a particular area to whoever delivers the service most cheaply.
The ‘least cost’ approach would ensure that money is not wasted, but there is little incentive for providers to supply anything more than the most basic services. Every additional vatu of cost would come out of the company’s profits.
The ‘best services’ approach provides encouragement to service providers to do as much as possible with the funds available, but requires a solid prior understanding of the technical challenges particular to a given area.
In either case, monitoring would have to be robust. Service Level Agreements, or SLAs, will no doubt be required. In the simplest terms an SLA consists of an enforceable promise that the quality of service will never drop below a predetermined level. They are common throughout the telecommunications industry. Though the mechanisms of exacting and enforcing promises from service providers are well understood, verification in the remotest areas of Vanuatu could prove costly and difficult to sustain.
John Crook, the newly appointed Interim Telecoms Regulator, has a wealth of experience working in remote areas. It’s still too early to expect him to elaborate a detailed picture of exactly how this fund will be administered. His overall vision is of a transitional approach that starts with the incumbents shouldering the bulk of the work in the short term, but which will in the fullness of time allow smaller operators into the fold.
The plan is to begin by making funds available to TVL so that it can continue to operate its fixed-line services in money-losing locations. [wrong. ed.] Once the mobile telephony infrastructure is in place and operational issues are dealt with, marginal service areas will be put on the table. It’s not yet clear at what point other service providers besides Digicel and TVL will be allowed to compete for these service contracts, but Wednesday’s announcement suggests this is inevitable.
The pot of money used to finance these operations will initially consist of a significant cash donation provided by AusAID. In the years to come, fund levels will be maintained by contributions from providers, based on the volume of their revenues.
The fund could also play an important role in ensuring that training and education programmes reach the most disadvantaged, possibly in partnership with the Ministry of Education or local NGOs. How grassroots-level access to the fund would be facilitated is not at all clear right now. Given the current capacity of the Regulator’s office, it’s likely that the administration of community outreach projects would likely have to be outsourced.
I must confess to a bit of trepidation when I consider access to this substantial pool of money, either by a government ministry or by local NGOs. Government implementation and support of technology in the islands has until now been less than adequate. Efforts are underway to improve this, but the logistics of the task put all efforts at a significant disadvantage.
Grassroots technical projects are thin on the ground, and while they’ve had some successes, there are few proven methodologies. What is clear, however, is that standard project management approaches must be supplemented with detailed local expertise. I’ve written before about needing to develop the right tools for the job, and the UAF presents a perfect opportunity to develop them.
The way Mr. Crook plays his role as Interim Regulator will set a critical precedent here in Vanuatu. There is no question that he possesses the knowledge and experience to help guide Vanuatu through these early days as we transition. As his office begins to accumulate mass and momentum, however, it will find that its role will rely less on wisdom and moral suasion (backed in the last resort by the legal bat) and more on its ability to define and direct development in the area of telecommunications.
The Regulator will never hang up his referee’s jersey entirely, but in the future he’ll be making the rules as well as enforcing them. The UAF and other tools will give him the clout to make people pay attention. The potential for political interference in such an influential position is an ever-present danger, one which can only be mitigated by the integrity and strength of character of the Regulator himself, and the Minister who assigns these powers to him.
While I am normally a strong proponent of localising responsible positions, I must make an exception here, and suggest that the term for which Mr. Crook has been appointed is too short. It’s clear that his office will eventually be integrated into the Utilities Regulatory Authority, but this state of flux is all the more reason to maintain continuity in personnel (and personalities) through the transition.
Ni-Vanuatu-owned businesses operate at a distinct disadvantage to their competitors. As manager of the largest ni-Vanuatu-owned IT company, I know better than most. We have less access to credit facilities than our competitors from overseas, hence fewer resources to throw at a given project. We are largely limited to whatever cash we have on hand, meaning that anything other than short-term, incremental investment is beyond us. Depending on how access to the UAF is structured, ni-Vanuatu-owned businesses –especially small, island based startups – may be frozen out of the fund entirely.
Of those in VITUS who have expressed an opinion on the matter, the majority feel that there is a categorical need to for ni-Vanuatu interests to begin developing an ownership stake in this area. I make no bones about having an axe to grind here; it’s exactly why I went to work for CNS. My support of local partnership in communications is not motivated by economic self-interest (though the profits do stay onshore), but out of the clear need for better understanding.
Whether technological or social, nobody understands communications issues better than our own home-grown talent. If we structure the Universal Access Fund so that it fosters and encourages local entrants, we will have taken an important step in ensuring the generational stability of Vanuatu’s communications revolution.